
1.
Net present value method is the method which is used to compare the initial
The net present value of each investment, using the present value of $1 table in Exhibit 2.
2.
Present value index:
Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.
The present value index is computed as follows:
To calculate: The present value index of the investment proposals.
3.
To explain: The proposal that offers the largest amount of present value per dollar of investment.

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Chapter 25 Solutions
Financial & Managerial Accounting
- You are given the following information about a firm: Return on assets (ROA) is 12 percent, and total assets are $5,200,000. The firm's common equity is $40 per share, and there are 120,000 shares of common stock outstanding. What is the return on equity (ROE) for the firm?arrow_forwardWhat is the contribution margin ratio? Accountingarrow_forwardWhat is the financial result?arrow_forward
- General accounting questionarrow_forwardHarmony Cosmetics manufactures beauty products and provides the following production data: WIP Inventory, January 1 O units Units started 30,000 units Units completed and transferred 22,500 units WIP Inventory, December 31 7,500 units Direct materials cost $315,000 $620,000 $350,000 Direct labor cost Manufacturing overhead The units in ending WIP Inventory were 70% complete for materials and 50% complete for conversion costs. On December 31, the cost per equivalent unit for materials would be closest to:arrow_forwardHow can I solve this financial accounting problem using the appropriate financial process?arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,

