Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 12% 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	$ (100,000)	$ (143,000)
Net cash flows in:
Year 1	35,000	75,000
Year 2	45,500	65,000
Year 3	70,500	55,000

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 on the basis of profitability index?

Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 6% 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.)

	Pool	Spa
Initial investment	$ (175,325)	$ (160,960)
Net cash flows in:
Year 1	36,000	35,000
Year 2	58,000	57,000
Year 3	78,295	57,000
Year 4	87,400	82,000
Year 5	69,000	31,000

a. For each investment project compute the net present value. b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index?

Required A Required B Compute each project's net present value. (Round your answers t Net Cash Present Value of Present Value of Flows 1 at 12% Net Cash Flows Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value $ $ 0 0 $ $ $ $ 0 0 0 0 Required A Required B Compute each project's profitability index. If the company can choose only one project, which should it choose on t profitability index? Numerator: Profitability Index 1 1 Denominator: Project X1 Project X2 If the company can choose only one project, which should it choose on the basis of profitability index? = Profitability index 0 0 Req A For each investment project compute the net present value. Totals Totals Pool Year 1 Year 2 Year 3 Year 4 Year 5 Spa Req B and C Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flows $ Net Cash Flows $ X X Present Value Present Value = II = = II B = = 11 = Present Value of Net Cash Flows Present Value of Net Cash Flows Req A Req B and C b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index? Profitability Index Numerator: 1 Denominator: Pool Spa If the company can only select one project, which should it choose on the basis of profitability index? = Profitability index 0 0