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.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 12E
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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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3842d147-0bd0-46f3-b5e9-ec3cafc772ef%2F93510313-9e11-4999-95db-18588909ca10%2Fj6wco9_processed.jpeg&w=3840&q=75)
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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