Concept explainers
(1)
Net present value method is the method which is used to compare the initial
To calculate: The net present value of the investment.
(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:
Present value index =Total present value of net cash flowAmount to be invested
To calculate: The present value index of the investment.
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Chapter 26 Solutions
CENGAGENOW 6 TERMS ACCESS CARD 27TH ED.
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