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this is a 2 part question Problem 24-4A (Algo) Applying net present value and profitability index LO P3 Rowon Company is considering two altemative investment
this is a 2 part question
Problem 24-4A (Algo) Applying net present value and profitability index LO P3 Rowon Company is considering two altemative investment projects. Each roguires a $258,000 initial ifrvestment. Project A as expected to generate net cash flows of $68.000 per year over the nont six years. Prockt B is expected to generate net cast flows of $58, oo0 per year over the hext seven yoars. Management requires an 7% rate of return on ts irvestrnents (PV of $1 EV or $1. PVA of $1. and EVA of Si) (Use appropriate factor(s) from the tables provided.) Required: 1. Compute each project's net present value 2. Compute each project's profitability index. 3. If the company can choose only one project which should it choose, based on profitab alty index? Complete this question by entering your answers in the tabs below. Compute each project's net present value. (Do fiot round intemediate calculations. Round your present value factor to 4 decirtals and your final answers to the nearest whole doflar-) Complete this question by entering your answers in the tabs below. Compute each project's profitability index. (Do not round intermediate values. Enter your answers rounded to the nearest whole dollar) Step by Step Solution
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