27.

The management of California Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment:

Year	Income from Operations		Net Cash Flow
1	$100,000		$180,000
2	40,000		120,000
3	20,000		100,000
4	10,000		90,000
5	10,000		90,000

The present value index for this investment is

a.1.45

b.0.88

c.1.14

d.0.70