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Project X1 Project X2 ${80,000) $(120,000) 25,000 Initial investment Expected net cash flows: Year 1 60,000 Year 2 ..... Year 3... 35,500 50,000 60,500 40,000

Project X1 Project X2 ${80,000) $(120,000) 25,000 Initial investment Expected net cash flows: Year 1 60,000 Year 2 ..... Year 3... 35,500 50,000 60,500 40,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
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 Tiger Co. The company requires a 4% return from its investments. Compute each project’s (a) net present value and (b) profitability index. (Round present value calculations to the nearest dollar and round the profitability index to two decimal places.) If the company can choose only one project, which should it choose?

Project X1 Project X2 ${80,000) $(120,000) 25,000 Initial investment Expected net cash flows: Year 1 60,000 Year 2 ..... Year 3... 35,500 50,000 60,500 40,000
Transcribed Image Text:Project X1 Project X2 ${80,000) $(120,000) 25,000 Initial investment Expected net cash flows: Year 1 60,000 Year 2 ..... Year 3... 35,500 50,000 60,500 40,000
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