The net present value for Proposals X and Y has been calculated on the basis of the data given below. Proposal X Proposal Y Amount to be invested $145,000 $280,000 Total present value of net cash flow 172,000 320,000 Net present value 27,000 40,000 Determine the present value index for each proposal. Round your answers to two decimal places. Present Value Index Proposal X $fill in the blank 1 Proposal Y $fill in the blank 2
The net present value for Proposals X and Y has been calculated on the basis of the data given below. Proposal X Proposal Y Amount to be invested $145,000 $280,000 Total present value of net cash flow 172,000 320,000 Net present value 27,000 40,000 Determine the present value index for each proposal. Round your answers to two decimal places. Present Value Index Proposal X $fill in the blank 1 Proposal Y $fill in the blank 2
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
Section: Chapter Questions
Problem 15.12E
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The
| Proposal X | Proposal Y | |||
| Amount to be invested | $145,000 | $280,000 | ||
| Total present value of net cash flow | 172,000 | 320,000 | ||
| Net present value | 27,000 | 40,000 |
Determine the present value index for each proposal. Round your answers to two decimal places.
| Present Value Index | |
| Proposal X | $fill in the blank 1 |
| Proposal Y | $fill in the blank 2 |
Expert Solution
Step 1
Present value index is also known as profitability index. It is calculated using the below formula :-
Present value index = Present value of net cash flow/Investment
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