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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 $1). (Use appropriate factor(s) from the tables provided.)

	Project A					Project B
Initial investment		$	(174,325	)			$	(152,960	)
Expected net cash flows in year:
1			41,000					44,000
2			60,000					53,000
3			72,295					68,000
4			87,400					81,000
5			59,000					30,000

For each alternative project compute the net present value.

	Project A Initial Investment $174,325 Chart values are based on: i = Year Cash inflow x Table factor = Present Value 1 = 2 = 3 = 4 = 5 = Project B Initial Investment $152,960 Year Cash inflow x Table factor = Present Value 1 = 2 = 3 = 4 = 5 =

For each alternative project compute the profitability index. Choose Numerator: / Choose Denominator: = Profitability index / = Profitability index Project A Project B

2. Assume If the company can only select one project, which should it choose?

Project A or Project B

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