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 $(179,325) Initial investment Expected net cash flows in Year 1 Year 2 Year 3 Year 4 Year 5 46,000 52,000 78,295 83,400 56,000 Project B $(149,960) 38,000 57,000 59,000 75,000 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? Required A Required B For each alternative project compute the net present value. II Present Value Project A Initial Investment $ 179,325 Chart Values are Based on: 101% Year Cash Inflow PV Factor 1 46,000 x 2 52,000 3 78,295 x 4 83,400 x 5 56,000 x 11 11 Present value of cash inflows Present value of cash outflows Net present value Project B $ 149,960 Initial Investment Year Cash Inflow PV Factor II Present Value 1 38,000 x II 2 3 57,000 x 59,000 x 75,000 x = 4 5 25,000 x II Present value of cash inflows Present value of cash outflows Net present value 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 Profitability index Profitability Index Choose Numerator: 1 Choose Denominator: Present value of net cash flows Initial investment Project A Project B If the company can only select one project, which should it choose? 0 0