Question
Asked Dec 3, 2019
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Mountain Brook Company is considering two investment opportunities whose cash flows are provided below:
Investment Investment
Year
В
(15,500)
(9,600)
5,180
4,160
5,180
2
5,180
3,220
1,240
3
5,180
4
4,160
The company's hurdle rate is 10%. What is the present value index of Investment A? (Do not round your PV factors and intermediate calculations.)
Multiple Choice
1.06
1.00
1.01
None of these answers is correct
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Mountain Brook Company is considering two investment opportunities whose cash flows are provided below: Investment Investment Year В (15,500) (9,600) 5,180 4,160 5,180 2 5,180 3,220 1,240 3 5,180 4 4,160 The company's hurdle rate is 10%. What is the present value index of Investment A? (Do not round your PV factors and intermediate calculations.) Multiple Choice 1.06 1.00 1.01 None of these answers is correct

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Expert Answer

Step 1

Calculate present value of cash inflo...

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Present value of PVIF Factor Particulars (A) Year @ 10% (B)cash inflows (A*B) 0.9091 0.8264 $5,180 $4,709.09 1 $5,180 $4,280.99 2 $5,180 $3,891.81 $2,841.34 3 0.7513 $4,160 4 0.6830 $15,723.23

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