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Following is information on two alternative investments being considered by Jolee Company. The company requires a 6% return from its investments. (PV of $1. FV of $1. PVA of $1. and FVA of S1) (Use appropriate factor(s) from the tables provided.) Project A $(188,325) Initial investment Expected net cash flows in year: Project B $(148,960) 39, 51,000 82,295 93,400 61,000 26,00 57,000 58,000 84,000 21. 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 $ 188,325 Chart Values are Based on: Year Cash Inflow X PV Factor - Present Value $ Initial Investment Year Cash Inflow Project B 148,960 PV Factor = X Present Value Following is information on two alternative investments being considered by Jolee Company. The company requires a 6% return from its investments. (PV of $1. FV of $1. PVA of $1, and EVA of $1 (Use appropriate factor(s) from the tables provided.) Initial investment Expected net cash flows in year: Project A $(188,325) Project B $(148,960) 39,000 51,00 82.295 93,400 61,000 26,000 57.000 58,eee 84,8ce 21,000 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 profitability index. If the company can only select one project, which should it choose? Profitability Index ! Choose Denominator: Choose Numerator: - Profitability Index Profitability index Project A Project B If the company can only select one project, which should it choose? Interstate Manufacturing is considering either replacing one of its old machines with a new machine or having the old machine overhauled, Information about the two alternatives follows. Management requires a 8% rate of return on its investments. Use the Py of $1. FV of $1. PVA of St. and EVA of St (Use appropriate factor(s) from the tables provided.) Alternativet: keep the old machine and have it overhauled. If the old machine is overhauled, it will be kept for another five years and then sold for its salvage value. Cost of old machine Cost of overhaul Annual expected revenues generated Annual cash operating costs after overhaul Salvage value of old machine in 5 years $118.00 156.000 94,000 Alternative 2: Sell the old machine and buy a new one. The new machine is more efficient and will yield substantial operating cost savings with more product being produced and sold Cost of new machine "Salvage value of old machine now Annual expected revenues generated Annual cash operating costs Salvage value of new machine in 5 years $294.000 46,000 100,000 29,000 12,000 1. Detennine the net present value of alterative 1. Initial cash investment (net) Chart values are based on: iar Subsequent Year Cash inflow outflow) X Table factor - Present Value 2. Determine the net present value of alternative 2. Initial cash investment (net) Subsequent Year Cash inflow X Table factor - (outflow) Present Value 2 Now 3. Which alternative should management select

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