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	$ (110,000)	$ (169,000)
Net cash flows in:
Year 1	40,000	82,500
Year 2	50,500	72,500
Year 3	75,500	62,500

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 on the basis of profitability index?

Compute each projects net present value. (Round your answers to the nearest whole dollar.)

	Net Cash Flows	Present Value of 1 at 12%	Present Value of 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

Profitability Index
	Numerator:	/	Denominator:
		/		=	Profitability index
Project X1
Project X2
If the company can choose only one project, which should it choose on the basis of profitability index?