Saturday, 17 October 2015

Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments.

Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)
 

   Project A Project B
  Initial investment   $ (160,000 )     $ (105,000 )  
  Expected net cash flows in year:                    
1     40,000         32,000    
2     56,000         50,000    
3     80,295         66,000    
4     90,400         72,000    
5     65,000         24,000    



1(a)
For each alternative project compute the net present value.

save image

1(b)
For each alternative project compute the profitability index.

save image

1 comment:

  1. Compute the internal rate of return for each of the projects using excel functions.

    ReplyDelete