a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Present Value Flows Present Value of Net Cash Flows of 1 at 4% Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value $ 30,000 40,500 65,500 $ 136,000 $ 67,500 57,500 47,500 $ 172,500 $ $ $ 0 0 0 0

a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Present Value Flows Present Value of Net Cash Flows of 1 at 4% Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value $ 30,000 40,500 65,500 $ 136,000 $ 67,500 57,500 47,500 $ 172,500 $ $ $ 0 0 0 0

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 11P

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