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In: Accounting
Dip N’ Dunk Doughnuts has computed the net present value for capital expenditure at two locations....
Dip N’ Dunk Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Ft. Collins Boulder Total present value of net cash flow $277,200 $295,160 Amount to be invested (264,000) (314,000) Net present value $13,200 $(18,840) a. Determine the present value index for each proposal. Round your answer for the present value index to two decimal places. Ft. Collins Boulder Total present value of net cash flow $ $ Amount to be invested $ $ Present value index b. Which location does your analysis support? (If both present value indexes are the same, either location will grade as correct.) , because the net present value index is 1.
Solutions
Expert Solution
| . Computation of PV Index | ||
| Collins | Boulder | |
| PV of Cash Flow | 277,200 | 295,160 |
| Amount Invested | 264,000 | 314,000 |
| PV Index | 1.05 | 0.94 |
It will be advisable for Collin because PV index is more than 1 for Collins
ekkarill92 answered 2 years agoRelated Solutions
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