In: Accounting

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 6% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
**(Use appropriate factor(s) from the tables provided.)
**

Project A | Project B | |||||||||

Initial investment | $ | (179,325 | ) | $ | (148,960 | ) | ||||

Expected net cash flows in: | ||||||||||

Year 1 | 41,000 | 32,000 | ||||||||

Year 2 | 60,000 | 44,000 | ||||||||

Year 3 | 75,295 | 59,000 | ||||||||

Year 4 | 88,400 | 73,000 | ||||||||

Year 5 | 65,000 | 29,000 | ||||||||

**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?

Project A | |||||||||

Initital investment | 179,325 | ||||||||

Chart values are Based on | |||||||||

i= | 6% | ||||||||

Year | Cash | * | PV | = | Present | ||||

inflow | Factor | Value | |||||||

1 | 41,000 | * | 0.9434 | = | 38679 | ||||

2 | 60,000 | * | 0.89 | = | 53400 | ||||

3 | 75,295 | * | 0.83962 | = | 63219 | ||||

4 | 88,400 | * | 0.79209 | = | 70021 | ||||

5 | 65,000 | * | 0.74726 | = | 48572 | ||||

273891 | |||||||||

Present value of cash inflows | 273891 | ||||||||

present value of cash outflows | 179325 | ||||||||

Net Present value | 94566 | ||||||||

project B | |||||||||

Initital investment | 148,960 | ||||||||

Chart values are Based on | |||||||||

i= | 6% | ||||||||

Year | Cash | * | PV | = | Present | ||||

inflow | Factor | Value | |||||||

1 | 32,000 | * | 0.9434 | = | 30189 | ||||

2 | 44,000 | * | 0.89 | = | 39160 | ||||

3 | 59,000 | * | 0.83962 | = | 49538 | ||||

4 | 73,000 | * | 0.79209 | = | 57823 | ||||

5 | 29,000 | * | 0.74726 | = | 21671 | ||||

198379 | |||||||||

Present value of cash inflows | 198379 | ||||||||

present value of cash outflows | 148960 | ||||||||

Net Present value | 49419 | ||||||||

b) | Profitability Index | ||||||||

Choose Numerator: | Choose Denominator | = | profitability index | ||||||

Present value of net cash flows | / | Initial Investment | = | profitability index | |||||

Project A | 273891 | / | 179,325 | 1.52735 | |||||

Project B | 198379 | / | 148,960 | 1.33176 | |||||

If the company can only select one project , which should it choose? | project A | ||||||||

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 10% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables provided.) Project A
Project B Initial investment $ (189,325 ) $ (144,960 ) Expected net
cash flows in year: 1 54,000 38,000 2 45,000 59,000 3 90,295 52,000
4 91,400 75,000 5 56,000 32,000 a. For each alternative project
compute...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 6% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project A
Project B
Initial investment
$
(171,325
)
$
(149,960
)
Expected net cash flows in:
Year 1
48,000
33,000
Year 2
55,000
56,000
Year 3
78,295
54,000
Year 4
91,400
82,000
Year 5
54,000
31,000
a. For...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 8% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project A
Project B
Initial investment
$
(176,325
)
$
(157,960
)
Expected net cash flows in year:
1
36,000
28,000
2
57,000
44,000
3
91,295
55,000
4
81,400
68,000
5
68,000
30,000
a. For each alternative project compute...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 6% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables provided.) Project A
Project B Initial investment $ (174,325 ) $ (145,960 ) Expected net
cash flows in: Year 1 40,000 41,000 Year 2 42,000 57,000 Year 3
74,295 58,000 Year 4 88,400 70,000 Year 5 58,000 36,000 a. For...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 8% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables provided.)
Project A
Project B
Initial investment
$
(184,325
)
$
(154,960
)
Expected net cash flows in
year:
1
50,000
29,000
2
60,000
55,000
3
75,295
48,000
4
78,400
83,000
5
71,000
22,000
a. For each alternative project...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 6% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project A
Project B
Initial investment
$
(188,325
)
$
(154,960
)
Expected net cash flows in:
Year 1
50,000
33,000
Year 2
41,000
48,000
Year 3
80,295
57,000
Year 4
87,400
68,000
Year 5
64,000
34,000
a. For...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 8% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables provided.)
Project A
Project B
Initial
investment
$
(184,325
)
$
(141,960
)
Expected net
cash flows in:
Year 1
41,000
31,000
Year 2
43,000
59,000
Year 3
89,295
55,000
Year 4
95,400
71,000
Year 5
68,000
31,000
a. For...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 8% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project A
Project B
Initial investment
$
(189,325
)
$
(159,960
)
Expected net cash flows in:
Year 1
49,000
42,000
Year 2
41,000
51,000
Year 3
87,295
66,000
Year 4
81,400
77,000
Year 5
60,000
23,000
a. For...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 10% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project A
Project B
Initial investment
$
(175,325
)
$
(142,960
)
Expected net cash flows in:
Year 1
40,000
33,000
Year 2
44,000
43,000
Year 3
91,295
57,000
Year 4
88,400
78,000
Year 5
64,000
36,000
a. For...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 10% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project A
Project B
Initial investment
$
(175,325
)
$
(142,960
)
Expected net cash flows in:
Year 1
40,000
33,000
Year 2
44,000
43,000
Year 3
91,295
57,000
Year 4
88,400
78,000
Year 5
64,000
36,000
a. For...

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