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Please help with both parts!! Exercise 11-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger
Please help with both parts!!
Exercise 11-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% 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 $(128,000) Project x2 $(193,000) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 49,000 59,500 84,500 96,000 86,000 76,000 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? Required A Required B Compute each project's net present value. (Round your answers to the nearest whole dollar.) Net Cash Flows Present Value of 1 at 8% Present Value of Net Cash Flows Project X1 Year 1 Year 2 Year 3 Totals $ 0 $ 0 Amount invested $ 0 Net present value Project X2 Year 1 Year 2 Year 3 Totals $ 0 0 Amount invested Net present value $ 0 Required A Required B > Required A Required B Compute each project's profitability index. If the company can choose only one project, which should it choose? Profitability Index Choose Numerator: Choose Denominator: = Profitability Index Profitability index = 0 1 Project X1 Project X2 If the company can choose only one project, which should it choose? 0Step by Step Solution
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