FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 | $ | (181,325 | ) | $ | (155,960 | ) | ||||
Expected net |
||||||||||
Year 1 | 35,000 | 27,000 | ||||||||
Year 2 | 54,000 | 43,000 | ||||||||
Year 3 | 77,295 | 61,000 | ||||||||
Year 4 | 91,400 | 77,000 | ||||||||
Year 5 | 65,000 | 20,000 | ||||||||
a. For each alternative project compute the
b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose?
For each alternative project compute the net present value.
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