Homework Answers
SOLUTION-
PROFITABILITY INDEX OF-
PROJECT 1 = Present Value of Future Cash Flows Generated by the Project / Initial Investment in the Project.
= $1,600,000 / $450,000
= 3.56
PROJECT 2 = Present Value of Future Cash Flows Generated by the Project / Initial Investment in the Project.
= $6 million / $4 million
= 1.5
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FQllowing is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from itslinvestments. (PV of $1. FV of $1,. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project A $(179,325) Project B $(158,960) Initial investment Expected net cash flows in year 1 43,000 42,000 76,295 82,400 65,000 33,000 48,000 51,000 80,000 23,000 2 a. For each alternative project compute the net present value b. For each alternative...
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