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Sweet Tooth Candy Company has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Carolina Jersey Total present value of net cash flow $330,720 $359,100 Less amount to be invested 318,000 378,000 Net present value $12,720 $(18,900) a. Determine the present value index for each proposal.

Sweet Tooth Candy Company has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Carolina Jersey Total present value of net cash flow $330,720 $359,100 Less amount to be invested 318,000 378,000 Net present value $12,720 $(18,900) a. Determine the present value index for each proposal.

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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Present Value Index Sweet Tooth Candy Company has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Carolina Jersey Total present value of net cash flow $330,720 $359,100 Less amount to be invested 318,000 378,000 Net present value $12,720 $(18,900) a. Determine the present value index for each proposal. Round your answer for the present value index to two decimal places. Carolina Jersey Total present value of net cash flow Amount to be invested Present value index b. Which location does your analysis support?
Transcribed Image Text:Present Value Index Sweet Tooth Candy Company has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Carolina Jersey Total present value of net cash flow $330,720 $359,100 Less amount to be invested 318,000 378,000 Net present value $12,720 $(18,900) a. Determine the present value index for each proposal. Round your answer for the present value index to two decimal places. Carolina Jersey Total present value of net cash flow Amount to be invested Present value index b. Which location does your analysis support?
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