Following is information on two alternative investments projects being considered by Tiger 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 X1 Project X2 Initial investment $ (112,000) $ (170,000) Net cash flows in: Year 1 41,000 84,000 Year 2 51,500 74,000 Year 3 76,500 64,000 a. Compute each project’s net present value. b. Compute each project’s profitability index. If the company can choose only one project, which should it choose on the basis of profitability index?

Following is information on two alternative investments projects being considered by Tiger 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 X1 Project X2 Initial investment $ (112,000) $ (170,000) Net cash flows in: Year 1 41,000 84,000 Year 2 51,500 74,000 Year 3 76,500 64,000 a. Compute each project’s net present value. b. Compute each project’s profitability index. If the company can choose only one project, which should it choose on the basis of profitability index?

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter16: Financial Planning And Forecasting

Section: Chapter Questions

Problem 2P: AFN EQUATION Refer to Problem 16-1. What additional funds would be needed if the companys year-end...

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	Project X1	Project X2
Initial investment	$ (112,000)	$ (170,000)
Net cash flows in:
Year 1	41,000	84,000
Year 2	51,500	74,000
Year 3	76,500	64,000

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Exercise 24-12 (Algo) Net present value, unequal cash flows, profitability index, and service company LO P3 Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 6% return from its investments. (PV of $1. FV of $1. PVA of $1. and EVA of $1) (Use oppropriate factor(s) from the tables provided.) Initial investment Net cash flows in: Reg A a. For each investment project compute the net present value. b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index? Pool Year 1 Year 21 Year 3 Year 4 Year 5 Complete this question by entering your answers in the tabs below. Year 1 Year 2 Year 3 Year 4 Year 5 Totals Pool Spa $ (177,325) $ (159,960) Spa 49,000 46,000 74,295 82,400 72,000 Req B and C For each investment project compute the net present value. 26,000 46,000 68,000 73,000 29,000 Net Cash Flows…
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