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		$	(179,325	)			$	(159,960	)
Expected net cash flows in:
Year 1			44,000					37,000
Year 2			56,000					42,000
Year 3			81,295					63,000
Year 4			82,400					67,000
Year 5			67,000					36,000

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. Present Value Project A Initial Investment S 179,325 Chart Values are Based on: 10% % Year Cash Inflow PV Factor 1 44,000 x 2 56,000x 3 81,295 x 4 82,400 x 5 67,000 x = Initial Investment Year Cash Inflow 1 Project B S 159,960 PV Factor Present Value 11 2 3 4 5 = 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 1 Initial investment Project A Project B If the company can only select one project, which should it choose? 0 0