5 Saved 1.42 points Skipped eBook Perez Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $180,000 and $154,000, respectively. The present value of cash inflows and outflows for the second alternative is $355,000 and $290,000, respectively. Required a. Calculate the net present value of each investment opportunity. Note: Negative amounts should be indicated by a minus sign. b. Calculate the present value index for each investment opportunity. Note: Round "PVI" to 2 decimal places. c. Indicate which investment will produce the higher rate of return. a. Alternative 1 (NPV) Hint a. Alternative 2 (NPV) Print References b. Alternative 1 (PVI) b. Alternative 2 (PVI) c. The investment that will produce the higher rate of return is

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Perez Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is
$180,000 and $154,000, respectively. The present value of cash inflows and outflows for the second alternative is $355,000 and
$290,000, respectively.
Required
a. Calculate the net present value of each investment opportunity.
Note: Negative amounts should be indicated by a minus sign.
b. Calculate the present value index for each investment opportunity.
Note: Round "PVI" to 2 decimal places.
c. Indicate which investment will produce the higher rate of return.
a. Alternative 1 (NPV)
Hint
a. Alternative 2 (NPV)
Print
References
b. Alternative 1 (PVI)
b. Alternative 2 (PVI)
c. The investment that will produce the higher rate of return is
Transcribed Image Text:5 Saved 1.42 points Skipped eBook Perez Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $180,000 and $154,000, respectively. The present value of cash inflows and outflows for the second alternative is $355,000 and $290,000, respectively. Required a. Calculate the net present value of each investment opportunity. Note: Negative amounts should be indicated by a minus sign. b. Calculate the present value index for each investment opportunity. Note: Round "PVI" to 2 decimal places. c. Indicate which investment will produce the higher rate of return. a. Alternative 1 (NPV) Hint a. Alternative 2 (NPV) Print References b. Alternative 1 (PVI) b. Alternative 2 (PVI) c. The investment that will produce the higher rate of return is
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