Following is information on two alternative investments being considered by Jole
ID: 2482158 • Letter: F
Question
Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% 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.)
Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% 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.)
Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (EV of $1. PV of $1, FVA of $1 and PVA of $1). (Use appropriate factor(s) from the tables provided.) Project A Project B $(182,325) $(150,960) Initial investment Expected net cash flows in year 49,000 51,000 86,295 91,400 67,000 43,000 53,000 53,000 70,000 29,000 4
Explanation / Answer
1.a. Project A ;
Project B:
b. Profitability index:
2. Project A should be selected
Year Cash inflows PV factor Present Value 1 49,000 0.9259 45,369.10 2 51,000 0.8573 43,722.30 3 86,295 0.7938 68,501.00 4 91,400 0.7350 67,179 5 67,000 0.6806 45,600.20 Present value of cash inflows 270,371.60 Initial investment (182,325) Net present value 88,046.60