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 Project B Initial investment $ (181,325 ) $ (155,960 ) Expected net cash flows in: Year 1 35,000 27,000 Year 2 54,000 43,000 Year 3 77,295 61,000 Year 4 91,400 77,000 Year 5 65,000 20,000 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? For each alternative project compute the net present value. Project A Initial Investment $181,325 Chart Values are Based on: i = % Year Cash Inflow x PV Factor = Present Value 1 = 2 = 3 = 4 = 5 = Project B Initial Investment $155,960 Year Cash Inflow x PV Factor = Present Value 1 = 2 = 3 = 4 = 5 =
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 Project B Initial investment $ (181,325 ) $ (155,960 ) Expected net cash flows in: Year 1 35,000 27,000 Year 2 54,000 43,000 Year 3 77,295 61,000 Year 4 91,400 77,000 Year 5 65,000 20,000 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? For each alternative project compute the net present value. Project A Initial Investment $181,325 Chart Values are Based on: i = % Year Cash Inflow x PV Factor = Present Value 1 = 2 = 3 = 4 = 5 = Project B Initial Investment $155,960 Year Cash Inflow x PV Factor = Present Value 1 = 2 = 3 = 4 = 5 =
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | Project B | |||||||||
| Initial investment | $ | (181,325 | ) | $ | (155,960 | ) | ||||
| Expected net |
||||||||||
| Year 1 | 35,000 | 27,000 | ||||||||
| Year 2 | 54,000 | 43,000 | ||||||||
| Year 3 | 77,295 | 61,000 | ||||||||
| Year 4 | 91,400 | 77,000 | ||||||||
| Year 5 | 65,000 | 20,000 | ||||||||
a. For each alternative project compute the
b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose?
For each alternative project compute the net present value.
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