Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% return from its investments. (FV of $1, PV of $1, FVA of $1 and PVA of $1). (Use appropriate factor(s) from the tables provided.)
Project A Project B
Initial investment $(176,325) $(156,960)
Expected net cash
flows in year: 146,000 37,000
2 48,000 58,000
3 82,295 55,000
4 90,400 84,000
5 74,000 23,000
(a) For each alternative project compute the net present value.
(b) For each alternative project compute the profitability index.
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