Question

Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the project:

	Project A				Project B
Useful life	5 Years				5 Years
Present value of cash inflows	$	84,360			$	55,100
Present value of cash outflows		77,000				49,000

What is the present value index for project A?

a.) 1.096

b.) 1.124

c.) 0.889

d.) 0.913

Answer 1

Present value index for project A = present value of cash inflows ÷ initial investment( cash outflow)

= $84,360÷77,000

= 1.096

For this option a is correct

____×____

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