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Following is information on two alternative investments being considered by Tiger Co. The company requires a 6% return from its investments. (PV of $1, FV

Following is information on two alternative investments being considered by Tiger Co. The company requires a 6% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Project X1 Project X2
Initial investment $ (94,000 ) $ (148,000 )
Expected net cash flows in year:
1 32,000 70,500
2 42,500 60,500
3 67,500 50,500

a. Compute each projects net present value. b. Compute each projects profitability index. If the company can choose only one project, which should it choose?

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Compute each project's net present value. Net Cash Present Value Present Value of Flows of 1 at 6% Net Cash Flows $ 0 $ 0 $ 0 Project X1 Year 1 Year 2 Year 3 Totals Amount invested Net present value Project X2 Year 1 Year 2 Year 3 Totals Amount invested Net present value $ 0 $ 0 $ 0 Compute each project's profitability index. If the company can choose only one project, which should it choose? = Profitability Index Choose Numerator: 1 Choose Denominator: 1 Project X1 Project X2 If the company can choose only one project, which should it choose? Profitability Index Profitability index 0 0

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