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Rowan Company is considering two alternative investment projects. Each requires a $251,000 initial investment. Project...

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Accounting

Rowan Company is considering two alternative investment projects. Each requires a $251,000 initial investment. Project A is expected to generate net cash flows of $61,000 per year over the next six years. Project B is expected to generate net cash flows of $51,000 per year over the next seven years. Management requires an 7% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: Compute each projects net present value. Compute each projects profitability index. If the company can choose only one project, which should it choose, based on profitability index

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