Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1, EV of $1, PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Project A $(171,325) Project B $(159,960) Initial investment Expected net cash flows in: Year 1 54,000 45,000 87,295 81,400 65,000 35,000 59,000 55,000 73,000 20,000 Year 2 Year 3 Year 4 Year 5 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?
Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1, EV of $1, PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Project A $(171,325) Project B $(159,960) Initial investment Expected net cash flows in: Year 1 54,000 45,000 87,295 81,400 65,000 35,000 59,000 55,000 73,000 20,000 Year 2 Year 3 Year 4 Year 5 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?
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 11P
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Question
![Project A
Initial Investment
171,325
Chart Values are Based on:
i =
%
Year
Cash Inflow
PV Factor
Present Value
54,000 x
45,000 x
87,295 x
1
2
81,400 x
65,000 x
4
Present value of cash inflows
Present value of cash outflows
Net present value
Project B
Initial Investment
159,960
Year
Cash Inflow
PV Factor
Present Value
35,000| x
59,000 x
55,000 x
73,000 x
20,000 x
1
2
||
||
3.
LO
3.
4)
LO](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6a02b260-ff6c-4d5e-84bc-57397ca3f648%2Fb844bc47-08a7-4d85-b0e3-1bff1f72f5f5%2Fdt7ws3_processed.png&w=3840&q=75)
Transcribed Image Text:Project A
Initial Investment
171,325
Chart Values are Based on:
i =
%
Year
Cash Inflow
PV Factor
Present Value
54,000 x
45,000 x
87,295 x
1
2
81,400 x
65,000 x
4
Present value of cash inflows
Present value of cash outflows
Net present value
Project B
Initial Investment
159,960
Year
Cash Inflow
PV Factor
Present Value
35,000| x
59,000 x
55,000 x
73,000 x
20,000 x
1
2
||
||
3.
LO
3.
4)
LO
![Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% 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
$(171,325)
Project B
$(159,960)
Initial investment
Expected net cash flows in:
35,000
59,000
55,000
Year 1
54,000
45,000
87,295
81,400
65,000
Year 2
Year 3
73,000
20,000
Year 4
Year 5
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?
Complete this question by entering your answers in the tabs below.
Required A
Required B
For each alternative project compute the net present value.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6a02b260-ff6c-4d5e-84bc-57397ca3f648%2Fb844bc47-08a7-4d85-b0e3-1bff1f72f5f5%2F6z5rzcc_processed.png&w=3840&q=75)
Transcribed Image Text:Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% 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
$(171,325)
Project B
$(159,960)
Initial investment
Expected net cash flows in:
35,000
59,000
55,000
Year 1
54,000
45,000
87,295
81,400
65,000
Year 2
Year 3
73,000
20,000
Year 4
Year 5
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?
Complete this question by entering your answers in the tabs below.
Required A
Required B
For each alternative project compute the net present value.
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