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Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 10% return from its investments. (PV of
Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 10% return from its investments. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Initial investment Project X1 Net cash flows in: $ (125,000) Project X2 $ (190,000) Year 1 46,000 91,500 Year 2 Year 3 56,500 81,500 81,500 71,500 a. Compute each project's net present value. b. Compute each project's profitability index. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Compute each project's net present value. (Round your answers to the nearest whole dollar.) Net Cash Present Value of Present Value of Flows 1 at 10% Net Cash Flows Project X1 Year 1 S 46,000 0.9091 $ 41,819 Year 2 56,500 0.8264 46,692 Year 3. 81,500 0.7513 61,231 Totals $ 184,000 $ 149,742 Initial investment i 125,000
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