Following is Information on two alternative Investment projects being considered by Tiger Company. The company requires a 5% return from its investments.  

a. Compute each project's net present value.

b. Compute each project's profitability index.

c. If the company can choose only one project, which should it choose on the basis of profitability Index?

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Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 $ (112,000) 41,000 51,500 76,500 Project X2 $ (184,000) 84,000 74,000 64,000 Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 $ (112,000) 41,000 51,500 76,500 Project X2 $ (184,000) 84,000 74,000 64,000

Answer rating: 100% (QA)

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