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		$	(174,325	)			$	(146,960	)
Expected net cash flows in year:
1			48,000					40,000
2			46,000					43,000
3			85,295					65,000
4			84,400					77,000
5			60,000					39,000

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?

174,325 Project A Initial Investment $ Chart Values are Based on: i = Year Cash Inflow X PV Factor = Present Value Project B Initial Investment Year $ 146,960 Cash Inflow X PV Factor = Present Value Profitability Index 1 Choose Denominator: Choose Numerator: = Profitability Index Profitability index Project A Project B If the company can only select one project, which should it choose? 0