Question: eBook Print References Check my workCheck My Work button is now enabled2 Item 2 Item 2 5 points Exercise 11-12 Net present value, profitability index
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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 a 9% 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 | $ | (116,000 | ) | $ | (172,000 | ) | ||||
| Expected net cash flows in: | ||||||||||
| Year 1 | 43,000 | 87,000 | ||||||||
| Year 2 | 53,500 | 77,000 | ||||||||
| Year 3 | 78,500 | 67,000 | ||||||||
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?
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