The net present value for Proposals X and Y has been calculated on the basis of the data given below. Proposal X Proposal Y Amount to be invested $145,000 $280,000 Total present value of net cash flow 172,000 320,000 Net present value 27,000 40,000 Determine the present value index for each proposal. Round your answers to two decimal places. Present Value Index Proposal X $fill in the blank 1 Proposal Y $fill in the blank 2
The net present value for Proposals X and Y has been calculated on the basis of the data given below. Proposal X Proposal Y Amount to be invested $145,000 $280,000 Total present value of net cash flow 172,000 320,000 Net present value 27,000 40,000 Determine the present value index for each proposal. Round your answers to two decimal places. Present Value Index Proposal X $fill in the blank 1 Proposal Y $fill in the blank 2
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
The
| Proposal X | Proposal Y | |||
| Amount to be invested | $145,000 | $280,000 | ||
| Total present value of net cash flow | 172,000 | 320,000 | ||
| Net present value | 27,000 | 40,000 |
Determine the present value index for each proposal. Round your answers to two decimal places.
| Present Value Index | |
| Proposal X | $fill in the blank 1 |
| Proposal Y | $fill in the blank 2 |
Expert Solution
Step 1
Present value index is also known as profitability index. It is calculated using the below formula :-
Present value index = Present value of net cash flow/Investment
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education