Following is information on two alternative investments being conside.docx - Following is information on two alternative investments being considered

# Following is information on two alternative investments being conside.docx

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Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% 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 \$(184,325) Project B \$(157,960) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 41,000 41,000 89, 295 80,400 55,000 42,000 45,000 64,000 75,000 38,000 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? Project A Initial Investment \$ 184,325 Chart Values are

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Unformatted text preview: Based on: Year Cash Inflow X PV Factor = Present Value Present value of cash inflows Present value of cash outflows Net present value Initial Investment Year Cash Inflow Project B \$ 157,960 X PV Factor - Present Value Present value of cash inflows Present value of cash outflows Net present value Required A Required B For each alternative project compute the profitability index. If the company can only sele choose? = = Profitability Index Profitability index Profitability Index Choose Numerator: 7 Choose Denominator: Annual pre-tax income 1 Accounts receivable Project A Project B If the company can only select one project, which should it choose? 0...
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• Spring '17
• DEBORAHGOLDSMITH

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