TerraGroup has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Total present value of net cash flow Amount to be invested Net present value Butte $601,600 (618,000) (16,400) a. Determine the present value index for each proposal. b. Which location does your analysis support? Explain. Naples $627,000 (600,100) 26,900

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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7. TerraGroup has computed the net present value for capital expenditure at two locations.
Relevant data related to the computation are as follows:
Total present value of net cash flow
Amount to be invested
Net present value
Butte
$601,600
(618,000)
(16,400)
a.
Determine the present value index for each proposal.
b. Which location does your analysis support? Explain.
Naples
$627,000
(600,100)
26,900
Transcribed Image Text:7. TerraGroup has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Total present value of net cash flow Amount to be invested Net present value Butte $601,600 (618,000) (16,400) a. Determine the present value index for each proposal. b. Which location does your analysis support? Explain. Naples $627,000 (600,100) 26,900
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