Question
Thornton Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $205,000 and $164,000,
Thornton Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $205,000 and $164,000, respectively. The present value of cash inflows and outflows for the second alternative is $380,000 and $302,500, respectively.
Required
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Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.)
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Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.)
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Indicate which investment will produce the higher rate of return.
| a. | Alternative 1 (NPV) | |
| Alternative 2 (NPV) | ||
| b. | Alternative 1 (PVI) | |
| Alternative 2 (PVI) | ||
| c. | The investment that will produce the higher rate of return is | |
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Financial Auditing With Information Technology Meeting The Challenge Of Cloud Computing Unstructured Data And Intangible Assets
Authors: J. Christopher Westland
1st Edition
149044873X, 978-1490448732
