Following is information on two alternative investment projects being considered by Tiger Company. The company requires an 8% return from its investments. (PV of $1, FV of S1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Initial investment $ (108,000) Net cash flows in: Year 1 Year 2 Year 3 39,000 49,500 74,500 Project X2 $ (176,000) 81,000 71,000 61,000 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?
Following is information on two alternative investment projects being considered by Tiger Company. The company requires an 8% return from its investments. (PV of $1, FV of S1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Initial investment $ (108,000) Net cash flows in: Year 1 Year 2 Year 3 39,000 49,500 74,500 Project X2 $ (176,000) 81,000 71,000 61,000 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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