Following is information on two alternative investments beingconsidered by Jolee Company. The company requires a 10% return fromits investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)(Use appropriate factor(s) from the tablesprovided.)
| Project A | Project B |
| Initial investment | | $ | (184,325 | ) | | | $ | (156,960 | ) | |
| Expected net cash flows in year: | | | | | | | | | | |
| 1 | | | 54,000 | | | | | 31,000 | | |
| 2 | | | 49,000 | | | | | 54,000 | | |
| 3 | | | 85,295 | | | | | 51,000 | | |
| 4 | | | 81,400 | | | | | 70,000 | | |
| 5 | | | 54,000 | | | | | 29,000 | | |
|
a. For each alternative project compute the netpresent value.
b. For each alternative project compute theprofitability index. If the company can only select one project,which should it choose?
