Present Value Index Montana Grill has computed the net present value for capital expenditures for the Billings and Great Falls locations using the net present value method. Relevant data related to the computation are as follows: Total present value of net cash flow Amount to be invested Billings $260,300 Great Falls $345,560 274,000 326,000 a. Determine the present value index for each proposal. Round to two decimal places. Billings Location Present Value Index Great Falls Location b. If Montana Grill can fund only one location, which location should be funded? Great Falls Feedback Check My Work a. Divide the total present value of the net cash flow by the amount to be invested. b. Know that a project will have a present value index greater than 1 when the net present value is positive.
Present Value Index Montana Grill has computed the net present value for capital expenditures for the Billings and Great Falls locations using the net present value method. Relevant data related to the computation are as follows: Total present value of net cash flow Amount to be invested Billings $260,300 Great Falls $345,560 274,000 326,000 a. Determine the present value index for each proposal. Round to two decimal places. Billings Location Present Value Index Great Falls Location b. If Montana Grill can fund only one location, which location should be funded? Great Falls Feedback Check My Work a. Divide the total present value of the net cash flow by the amount to be invested. b. Know that a project will have a present value index greater than 1 when the net present value is positive.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Present Value Index
Montana Grill has computed the net present value for capital expenditures for the Billings and Great Falls locations using the net present value method.
Relevant data related to the computation are as follows:
Total present value of net cash flow
Amount to be invested
Billings
$260,300
Great Falls
$345,560
274,000
326,000
a. Determine the present value index for each proposal. Round to two decimal places.
Billings Location
Present Value Index
Great Falls Location
b. If Montana Grill can fund only one location, which location should be funded?
Great Falls
Feedback
Check My Work
a. Divide the total present value of the net cash flow by the amount to be invested.
b. Know that a project will have a present value index greater than 1 when the net present value is positive.
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