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Following is information on two alternative investments being considered by Jolee Company. The company requires a...

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Accounting

Following is information on two alternative investments beingconsidered by Jolee Company. The company requires a 6% return fromits investments. (PV of $1, FV of $1, PVA of $1 and FVA of $1).(Use appropriate factor(s) from the tables provided.)
  

Project AProject B
Initial investment$(183,325)$(155,960)
Expected net cash flows in year:
151,00036,000
248,00057,000
376,29563,000
478,40081,000
560,00028,000


a. For each alternative project compute the netpresent value.
b. For each alternative project compute theprofitability index, if the company can only select one project,which should it choose?
a)

Project A
Initial Investment$183,325
Chart Values are Based on:
i =
YearCash InflowxPV Factor=Present Value
1=
2=
3=
4=
5=
Project B
Initial Investment$155,960
YearCash InflowxPV Factor=Present Value
1=
2=
3=
4=
5=

b

Profitability Index
Choose Numerator:/Choose Denominator:=Profitability Index
/=Profitability index
Project A0
Project B0
If the company can onlyselect one project, which should it choose?

Answer & Explanation Solved by verified expert
3.6 Ratings (385 Votes)
Ans PROJECT A Initial Investment 183325 Chart values are based on i 6 Year Cash inflow P V Factor Present Value 1 51000 0943 48093 2 48000 0890 42720 3 76295 0840 64088 4 78400 0792 62093 5 60000 0747 44820 Total Present Value Of    See Answer
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