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Exercise 25-10 NPV and profitability index LO P3 Following is Information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1. EV of $1. PVA of S1 and FVA of $1. (Use appropriate factor(s) from the tables provided.) Project A $(187,325) 1181525) Project B $(156,960) Initial investment Expected net cash flows in year: 47,000 52,000 82,295 81,400 59,000 35,800 56,008 52,000 71,000 32,000 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 $ Chart Values are Based on: 187,325 Year Cash Inflow X PV Factor = Present Value - Project A Initial Investment $ 187,325 Chart Values are Based on: = Year Cash Inflow X PV Factor - 1.25 Present Value 2 LP - - - Initial Investment Project B $ 156,960 Cash Inflow X PV Factor - Present Value 81,400 59,000 71,000 32,000 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 profitability index, if the company can only select one project, which should it choose?... Profitability Index Choose Denominator Choose Numerator: - = Profitability Index Profitability index Project A Project Bi If the company can only select one project, which should it choose? Required A

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