Exercise 24-10 NPV and profitability index LO P3 Following is information on two alternative investments...
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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.)
Project A
Project B
Initial investment
$
(181,325
)
$
(159,960
)
Expected net cash flows in year:
1
48,000
35,000
2
44,000
47,000
3
85,295
63,000
4
93,400
84,000
5
73,000
28,000
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?
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