Question
In: Accounting
Following is information on two alternative investments being considered by Tiger Co. The company requires a...
Following is information on two alternative investments being considered by Tiger Co. The company requires a 4% 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 X1 | Project X2 | |||||||||
| Initial investment | $ | (130,000 | ) | $ | (220,000 | ) | ||||
| Expected net cash flows in year: | ||||||||||
| 1 | 50,000 | 97,500 | ||||||||
| 2 | 60,500 | 87,500 | ||||||||
| 3 | 85,500 | 77,500 | ||||||||
a. Compute each project’s net present value.
b. Compute each project’s profitability index. If
the company can choose only one project, which should it
choose?
Solutions
Expert Solution
Answer to Part 2.
Project X1:
Profitability Index= PV of Cash Inflow / Initial Investment
Profitability Index= $180,022.80 / $130,000.00
Profitability Index= 1.38
Project X2:
Profitability Index= PV of Cash Inflow / Initial Investment
Profitability Index= $243,546.25 / $220,000.00
Profitability Index= 1.11
ekkarill92 answered 2 years agoRelated Solutions
Following is information on two alternative investments being considered by Tiger Co. The company requires a...
Following is information on two alternative investments being
considered by Tiger Co. The company requires a 7% return from its
investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
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Project X1
Project X2
Initial investment
$
(86,000
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$
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Expected net cash flows in year:
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64,500
2
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54,500
3
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a. Compute each project’s net present value.
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Following is information on two alternative investments being considered by Tiger Co. The company requires an...
Following is information on two alternative investments being
considered by Tiger Co. The company requires an 8% return from its
investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided.)
Project X1
Project X2
Initial
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$
(128,000
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$
(216,000
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Expected net
cash flows in:
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Year 2
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86,000
Year 3
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a. Compute each project’s net present
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b. Compute each...
Following is information on two alternative investments being considered by Tiger Co. The company requires a...
Following is information on two alternative investments being
considered by Tiger Co. The company requires a 7% return from its
investments.
Project X1
Project X2
Initial
investment
$
(106,000
)
$
(172,000
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Expected net
cash flows in year:
1
38,000
79,500
2
48,500
69,500
3
73,500
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using Excel functions. Based on internal rate of return, indicate
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9. Following is information on two alternative investments being considered by Tiger Co. The company requires...
9.
Following is information on two alternative investments being
considered by Tiger Co. The company requires a 5% 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 X1
Project X2
Initial investment
$
(82,000
)
$
(124,000
)
Expected net cash flows in:
Year 1
26,000
61,500
Year 2
36,500
51,500
Year 3
61,500
41,500
a. Compute each project’s net present value.
b....
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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
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compute...
Following is information on two alternative investments being considered by Jolee Company. The company requires a...
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...
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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
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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...
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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...
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
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$
(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...
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
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Expected net cash flows in:
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50,000
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Year 2
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Year 3
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Year 4
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68,000
Year 5
64,000
34,000
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