Exercise 24-10 NPV and profitability index LO P3 Following is information on two alternative investments being considere

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Exercise 24 10 Npv And Profitability Index Lo P3 Following Is Information On Two Alternative Investments Being Considere 1 (125.07 KiB) Viewed 12 times

Exercise 24-10 NPV and profitability index LO P3 Following is information on two alternative investments being considered by Jolee Company. The company requires a 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.) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 Project A $(187,325) 52,000 53,000 87,295 80,400 68,000 Required A Required B Project B $(160,960) 36,000 51,000 59,000 75,000 20,000 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? Complete this question by entering your answers in the tabs below.

Required A Required B For each alternative project compute the net present value. Project A Initial Investment $ Chart Values are Based on: % i = Year 1 2 3 4 5 Cash Inflow Initial Investment Year 1 2 3 4 5 Cash Inflow X X 187,325 $ PV Factor Project B 160,960 PV Factor = = = = = = = = = = = Present Value Present Value < Required A Required B >

Complete this question by entering your answers in the tabs below. Required A Required B For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Choose Numerator: Profitability Index 1 1 Choose Denominator: Project A Project B If the company can only select one project, which should it choose? < Required A = Profitability Index = Profitability index Required B >