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Mountain Brook Company is considering two investment opportunities whose cash flows are provided below: Investment A Investment B Year Year 0 ($15,000) ($9,000) Year 1 5,000 5,000 Year 2 5,000 4,000 Year 3 5,000 3,000 Year 4 4,000 1,000 The company's hurdle rate is 12%. What is the present value index of Investment A? A. 0.97 B. 1.00 C. 1.01 D. 1.12

Mountain Brook Company is considering two investment opportunities whose cash flows are provided below: Investment A Investment B Year Year 0 ($15,000) ($9,000) Year 1 5,000 5,000 Year 2 5,000 4,000 Year 3 5,000 3,000 Year 4 4,000 1,000 The company's hurdle rate is 12%. What is the present value index of Investment A? A. 0.97 B. 1.00 C. 1.01 D. 1.12

FINANCIAL ACCOUNTING
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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Mountain Brook Company is considering two investment opportunities whose cash flows are provided below: Investment A Investment B Year Year 0 ($15,000) ($9,000) Year 1 5,000 5,000 Year 2 5,000 4,000 Year 3 5,000 3,000 Year 4 4,000 1,000 The company's hurdle rate is 12%. What is the present value index of Investment A? A. 0.97 B. 1.00 C. 1.01 D. 1.12
Transcribed Image Text:Mountain Brook Company is considering two investment opportunities whose cash flows are provided below: Investment A Investment B Year Year 0 ($15,000) ($9,000) Year 1 5,000 5,000 Year 2 5,000 4,000 Year 3 5,000 3,000 Year 4 4,000 1,000 The company's hurdle rate is 12%. What is the present value index of Investment A? A. 0.97 B. 1.00 C. 1.01 D. 1.12
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