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 $(177,325) Project B $ (152,960) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 40,000 43,000 90, 295 95,400 61,000 37,000 47,000 54,000 83,000 24,000 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? Complete this question by entering your answers in the tabs below. Required A Required B For each alternative project compute the net present value. Project A Initial Investment $ 177,325 Chart Values are Based on: Year 10 % Cash Inflow 40,000 X 43,000 90,295 PV Factor 0.9090= 0.8260 Present Value 36,360 X 1 2 3 X 0.7510 x 00 4 95.400 X 0.6830 35,518 67,812 65,158 37,881 242,729 5 61,000 0.6210 = $ Present value of cash inflows Present value of cash outflows Net present value 242,729 177,325 65,404 X $ Initial Investment Year Project B $ Cash x Inflow 37,000 47,000 152,960 PV Factor 0.9090= 0.8260 1 2 Present Value 40,905 X 38,822 40,554 56,689 3 0.7510 54,000 X 83,000 X 4 0.6830 = 5 24,000 0.6210 14,904 191,874 $ Present value of cash inflows Present value of cash outflows Net present value 191,874 152,960 54,576 % $ For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Profitability Index Profitability index II Profitability Index Choose Numerator: Choose 1 Denominator: Present value of net cash Initial investment flows Project $ 242,729 X / $ . 177,325 Project $ 207,536 X 1 $ B 152,960 If the company can only select one project, which should it choose? 1.37 = 1.36 Project A