Following is information on two alternative investments being considered by Tiger Co. 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 X1					Project X2
Initial investment		$	(125,000	)			$	(190,000	)
Expected net cash flows in:
Year 1			46,000					91,500
Year 2			56,500					81,500
Year 3			81,500					71,500

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?

Compute each projects profitability index. If the company can choose only one project, which should it choose?

Profitability Index
	Choose Numerator:	/	Choose Denominator:	=	Profitability Index
	Present value of net cash flows	/	Initial investment	=	Profitability index
Project X1			$125,000	=	0.00
Project X2	$204,253	/	$190,000	=	1.08
If the company can choose only one project, which should it choose?					Project X1