Exercise 24-12 (Algo) Net present value, unequal cash flows, profitability index, and service company LOP3Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The companyrequires a 6% return from its investments. (PV of $1. FV of $1. PVA of $1. and EVA of $1) (Use oppropriate factor(s) from the tablesprovided.)Initial investmentNet cash flows in:Reg Aa. For each investment project compute the net present value.b. For each investment project compute the profitability index.c. If the company can only select one project, which should it choose on the basis of profitability index?PoolYear 1Year 21Year 3Year 4Year 5Complete this question by entering your answers in the tabs below.Year 1Year 2Year 3Year 4Year 5TotalsPoolSpa$ (177,325) $ (159,960)Spa49,00046,00074,29582,40072,000Req B and CFor each investment project compute the net present value.26,00046,00068,00073,00029,000Net Cash Flows X Present ValueNet Cash Flows x Present Value.Present Value ofNet Cash FlowsPresent Value ofALLEE Req AFor each investment project compute the net present value.PoolYear 1Year 2Year 3Year 4Year 5TotalsSpaYear 1Year 2Year 3Year 4Year 5Req B and CTotalsNet Cash Flows x Present ValueNet Cash Flows x Prosent ValueProsent Value ofNet Cash FlowsPresent Value ofNot Cash Flows< Req AReq B and C >

Time value of money :— According to this concept value of money in present day is greater than the…

Exercise 24-12 (Algo) Net present value, unequal cash flows, profitability index, and service company LO P3 Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 6% return from its investments. (PV of $1. FV of $1. PVA of $1. and EVA of $1) (Use oppropriate factor(s) from the tables provided.) Initial investment Net cash flows in: Year 1 Year 21 Year 3 Year 4 Year 5 Pool $ (177,325) 49,000 46,000 74,295 82,400 72,000 Spa $ (159,960) 26,000 46,000 68,000 73,000 29,000 a. For each investment project compute the net present value. b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index?

Exercise 24-12 (Algo) Net present value, unequal cash flows, profitability index, and service company LO P3 Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 6% return from its investments. (PV of $1. FV of $1. PVA of $1. and EVA of $1) (Use oppropriate factor(s) from the tables provided.) Initial investment Net cash flows in: Year 1 Year 21 Year 3 Year 4 Year 5 Pool $ (177,325) 49,000 46,000 74,295 82,400 72,000 Spa $ (159,960) 26,000 46,000 68,000 73,000 29,000 a. For each investment project compute the net present value. b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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