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

This preview shows page 1 - 3 out of 3 pages.

Image of page 1
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
Image of page 2
Image of page 3

You've reached the end of your free preview.

Want to read all 3 pages?

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...
View Full Document

  • Spring '17
  • DEBORAHGOLDSMITH

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors