Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 7% 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 X1 Project X2Initial investment $ (96,000) $ (152,000)Net cash flows in:    Year 1 33,000 72,000Year 2 43,500 62,000Year 3 68,500 52,000  a. Compute each project’s net present value.b. Compute each project’s profitability index.

To calculate the net present value (NPV) and profitability index of each project, we first need to calculate the present value of the cash flows for each year and then subtract the initial investment.

For Project X1:

Year 1: $33,000 / (1+0.07)^1 =$30,841.12 Year 2: $43,500 / (1+0.07)^2 =$37,981.22 Year 3: $68,500 / (1+0.07)^3 =$56,628.57

NPV for Project X1 = Sum of present values - Initial investment NPV for Project X1 = ($30,841.12 +$37,981.22 + $56,628.57) -$96,000 = $29,450.91

Profitability Index for Project X1 = (Sum of present values / Initial investment) Profitability Index for Project X1 = ($30,841.12 +$37,981.22 + $56,628.57) /$96,000 = 1.31

For Project X2:

Year 1: $72,000 / (1+0.07)^1 =$67,289.72 Year 2: $62,000 / (1+0.07)^2 =$54,205.61 Year 3: $52,000 / (1+0.07)^3 =$43,046.89

NPV for Project X2 = Sum of present values - Initial investment NPV for Project X2 = ($67,289.72 +$54,205.61 + $43,046.89) -$152,000 = $12,542.22

Profitability Index for Project X2 = (Sum of present values / Initial investment) Profitability Index for Project X2 = ($67,289.72 +$54,205.61 + $43,046.89) /$152,000 = 1.08

So, the NPV for Project X1 is $29,450.91 and for Project X2 is$12,542.22. The profitability index for Project X1 is 1.31 and for Project X2 is 1.08.