Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% 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		$	(182,325	)			$	(149,960	)
Expected net cash flows in year:
1			45,000					27,000
2			57,000					58,000
3			80,295					58,000
4			91,400					80,000
5			72,000					25,000

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?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

• Required A
• Required B

For each alternative project compute the net present value.

Project A
Initial Investment		$182,325
Chart Values are Based on:
i =not attempted	10%selected answer correct
Year	Cash Inflow	x	PV Factor	=	Present Value
1	45,000selected answer correct	x	0.9091selected answer correct	=	40,909selected answer correct
2	57,000selected answer correct	x	0.8265selected answer correct	=	47,107selected answer correct
3	80,295selected answer correct	x	0.7513selected answer correct	=	60,326
4	91,400selected answer correct	x	0.6830selected answer correct	=	62,426
5	72,000selected answer correct	x	0.6209selected answer correct	=	44,705
					$255,473
Present value of cash inflowsselected answer correct					$255,473
Present value of cash outflowsselected answer correct					182,325
Net present valueselected answer correct					$73,152selected answer correct
Project B
Initial Investment		$149,960
Year	Cash Inflow	x	PV Factor	=	Present Value
1	27,000selected answer correct	x	0.9091selected answer correct	=	24,545selected answer correct
2	58,000selected answer correct	x	0.8265	=	47,937
3	58,000selected answer correct	x	0.7513	=	43,575
4	80,000selected answer correct	x	0.6830	=	54,640
5	25,000selected answer correct	x	0.6209	=	15,523
					$186,220
Present value of cash inflowsselected answer correct					$186,220
Present value of cash outflowsselected answer correct					149,960
Net present valueselected answer correct					$36,260selected answer incorrect

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

• Required A
• Required B

For each alternative project compute the profitability index. If the company can only select one project, which should it choose?

Profitability Index
	Choose Numerator:	/	Choose Denominator:	=	Profitability Index
	Present value of net cash flowsselected answer correct	/	Initial investmentselected answer correct	=	Profitability index
Project A	$73,152selected answer incorrect	/	$182,325selected answer correct	=	0.40
Project B	$36,260selected answer incorrect	/	$149,960selected answer correct	=	0.24
If the company can only select one project, which should it choose?				Project Aselected answer correct