Findell Corporation is considering two projects,A and B,and it has gathered the following estimates for the projects $$\begin{array} { l c c }
& \text { Project A } & \text { Project B } \
\text { Useful life } & 5 \text { years } & 5 \text { years } \
\text { Present value of cash inflows } & \$ 84,360 & \$ 55,100 \
\text { Present value of cash outflows } & \$ 77,000 & \$ 49,000
\end{array}$$ What is the present value index for Project A?

Question

Findell Corporation is considering two projects,A and B,and it has gathered the following estimates for the projects $$\begin{array} { l c c } 
& \text { Project A } & \text { Project B } \
\text { Useful life } & 5 \text { years } & 5 \text { years } \
\text { Present value of cash inflows } & \$ 84,360 & \$ 55,100 \
\text { Present value of cash outflows } & \$ 77,000 & \$ 49,000
\end{array}$$ What is the present value index for Project A?

Quizplus · Accepted Answer

The present value index for Project A is calculated by dividing the present value of cash inflows by the present value of cash outflows: $ \frac{\$84,360}{\$77,000} = 1.096 $.

Findell Corporation Is Considering Two Projects,A and B,and It Has