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Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1, FV

Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% 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 A Project B
Initial investment $ (177,325 ) $ (148,960 )
Expected net cash flows in:
Year 1 53,000 38,000
Year 2 47,000 58,000
Year 3 79,295 66,000
Year 4 82,400 78,000
Year 5 67,000 22,000

a. For each alternative project compute the net present value. b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose? image text in transcribed

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Project A Initial Investment $ 177,325 Chart Values are Based on: % Year Cash Inflow PV Factor II Present Value 1 2 3 4 5 Initial Investment Year Cash Inflow Project B $ 148,960 PV Factor Present Value 1 N 3 4 = 5 5 For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Profitability Index Choose Denominator: Choose Numerator: Profitability Index Profitability index 0 1 Project A Project B If the company can only select one project, which should it choose? 0 Required Required B

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