Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 15% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Project X1 Project X2 Initial investment $ (130,000) $ (194,000) Net cash flows in: Year 1 50,000 97,500 Year 2 60,500 87,500 Year 3 85,500 77,500 Compute each project's net present value. Compute each project's profitability index. If the company can choose only one project, which should it choose on the basis of profitability index?
Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 15% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Project X1 Project X2 Initial investment $ (130,000) $ (194,000) Net cash flows in: Year 1 50,000 97,500 Year 2 60,500 87,500 Year 3 85,500 77,500 Compute each project's net present value. Compute each project's profitability index. If the company can choose only one project, which should it choose on the basis of profitability index?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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