Reference no: EM132962186

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            $(178,325)                 $(140,960)

Expected net cash flows in:

Year 1                             37,000                           27,000

Year 2                               56,000                            53,000

Year 3                               80,295                             56,000

Year 4                               93,400                                69,000

Year 5                                 66,000                                23,000

Problem a. For each alternative project compute the net present value.

Problem b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose?