Chapter 24 #5

5 Check my work Exercise 24-10 NPV and profitability index LO P3 1.42 Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% return from points its investments. (PV of $1, FV of $1, PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Project A Project B Initial investment $ (174, 325) $ (147 , 960) Expected net cash flows in: eBook Year 1 45, 000 25 , 000 Year 2 47 , 000 60 , 000 Year 3 85 , 295 59 , 000 Year 4 82 , 400 71, 000 Hint Year 5 65, 000 24, 000 Print a. For each alternative project compute the net present value. b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose?Required A Required B For each alternative project compute the net present value. Project A Initial Investment $ 174,325 Chart Values are Based on: i= % Year Cash Inflow X PV Factor E Present Value = 3 A 5 Project B Initial Investment $ 147,960 Year Cash Inflow X PV Factor Present Value 1 = 2 3 5 Required A Required B For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Profitability Index Choose Numerator: Choose Denominator: Profitability Index Profitability index Project A 0 Project B 0 If the company can only select one project, which should it choose?