Present Value Index Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Des Moines Cedar Rapids Total present value of net cash flow $252,720 $274,550 Amount to be invested (243,000) (289,000) Net present value $9,720 $(14,450) a. Determine the present value index for each proposal. Round your answers for the present value index to two decimal places. Des Moines Cedar Rapids Total present value of net cash flow Amount to be invested Present value index b. Which location does your analysis support? (If both present value indexes are the same, either location will grade as correct.) , because the net present value index is 1.

Present Value Index Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Des Moines Cedar Rapids Total present value of net cash flow $252,720 $274,550 Amount to be invested (243,000) (289,000) Net present value $9,720 $(14,450) a. Determine the present value index for each proposal. Round your answers for the present value index to two decimal places. Des Moines Cedar Rapids Total present value of net cash flow Amount to be invested Present value index b. Which location does your analysis support? (If both present value indexes are the same, either location will grade as correct.) , because the net present value index is 1.

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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Question

Present Value Index
Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows:
Des Moines
Cedar Rapids
Total present value of net cash flow
$252,720
$274,550
Amount to be invested
(243,000)
(289,000)
Net present value
$9,720
$(14,450)
a. Determine the present value index for each proposal. Round your answers for the present value index to two decimal places.
Des Moines
Cedar Rapids
Total present value of net cash flow
Amount to be invested
$
$
Present value index
b. Which location does your analysis support? (If both present value indexes are the same, either location will grade as correct.)
v, because the net present value index is
1.

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