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a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Present Value Flows Present Value of Net Cash Flows of 1 at 4% Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value $ 30,000 40,500 65,500 $ 136,000 $ 67,500 57,500 47,500 $ 172,500 $ $ $ 0 0 0 0

a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Present Value Flows Present Value of Net Cash Flows of 1 at 4% Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value $ 30,000 40,500 65,500 $ 136,000 $ 67,500 57,500 47,500 $ 172,500 $ $ $ 0 0 0 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 4% 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.) Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Required A Required B Required C Initial investment Net present value Complete this question by entering your answers in the tabs below. Project X1 $ (90,000) $ 30,000 40,500 65,500 $ 136,000 30,000 40,500 65,500 Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Flows Present Value of Net Cash Flows $ 67,500 57,500 47,500 $ 172,500 Project X2 $ (140,000) Present Value of 1 at 4% $ 67,500 57,500 47,500 $ $ $ 0 0 0 0
Transcribed Image Text:Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 4% 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.) Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Required A Required B Required C Initial investment Net present value Complete this question by entering your answers in the tabs below. Project X1 $ (90,000) $ 30,000 40,500 65,500 $ 136,000 30,000 40,500 65,500 Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Flows Present Value of Net Cash Flows $ 67,500 57,500 47,500 $ 172,500 Project X2 $ (140,000) Present Value of 1 at 4% $ 67,500 57,500 47,500 $ $ $ 0 0 0 0
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