Following is information on two alternative investments being considered by Tiger Co. The company requires...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Following is information on two alternative investments being considered by Tiger Co. The company requires a 4% 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
$
(80,000
)
$
(120,000
)
Expected net cash flows in year:
1
25,000
60,000
2
35,500
50,000
3
60,500
40,000
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?
Required A Required B Compute each project's profitability index. If the company can choose only one project, which shoul Choose Numerator: Present value of net cash Profitability Index Choose Denominator Initial investment flows Project X 1 Project 93.684 121.902 80.000 120.000 Profitability Index = Profitability index = 1.17 = 1.02 Project X1 X2 If the company can choose only one project, which should it choose?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
