Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Initial investment Project X1 $ (102,000) Project X2 $ (164,000) Net cash flows in: Year 1 36,000 76,500 Year 2 46,500 66,500 Year 3 71,500 56,500 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. ces Required A Required B Required C Compute each project's net present value. Note: Round your final answers to the nearest dollar. Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Net Cash Flows Present Value of 1 at 5% Present Value of Net Cash Flows Project X1 Project X2 $ (164,000) Initial investment Net cash flows in: $ (102,000) Year 1 36,000 Year 2 46,500 Year 3 71,500 76,500 66,500 56,500 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 profitability index. Project X1 Project X2 Profitability Index Numerator: I Denominator: + = Profitability Index = Profitability index < Required A Required C >
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Initial investment Project X1 $ (102,000) Project X2 $ (164,000) Net cash flows in: Year 1 36,000 76,500 Year 2 46,500 66,500 Year 3 71,500 56,500 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. ces Required A Required B Required C Compute each project's net present value. Note: Round your final answers to the nearest dollar. Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Net Cash Flows Present Value of 1 at 5% Present Value of Net Cash Flows Project X1 Project X2 $ (164,000) Initial investment Net cash flows in: $ (102,000) Year 1 36,000 Year 2 46,500 Year 3 71,500 76,500 66,500 56,500 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 profitability index. Project X1 Project X2 Profitability Index Numerator: I Denominator: + = Profitability Index = Profitability index < Required A Required C >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please complete these charts
Transcribed Image Text:Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5%
return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Initial investment
Project X1
$ (102,000)
Project X2
$ (164,000)
Net cash flows in:
Year 1
36,000
76,500
Year 2
46,500
66,500
Year 3
71,500
56,500
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.
ces
Required A Required B
Required C
Compute each project's net present value.
Note: Round your final answers to the nearest dollar.
Project X1
Year 1
Year 2
Year 3
Totals
Initial investment
Net present value
Net Cash
Flows
Present Value
of 1 at 5%
Present Value of
Net Cash Flows
Transcribed Image Text:Project X1
Project X2
$ (164,000)
Initial investment
Net cash flows in:
$ (102,000)
Year 1
36,000
Year 2
46,500
Year 3
71,500
76,500
66,500
56,500
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 profitability index.
Project X1
Project X2
Profitability Index
Numerator:
I
Denominator:
+
=
Profitability Index
=
Profitability index
< Required A
Required C >
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