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Determine the present value index for this investment

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Reference no: EM132886315

Question - The management of X Corporation is considering the purchase of a new machine costing P375,000. The company's desired rate of return is 6%. Use the following data in determining the acceptability of this investment:

Year

Operating Income

Net Cash Flow

1

P18,750

P93,750

2

18,750

93,750

3

18,750

93,750

4

18,750

93,750

5

18,750

93,750

Required -

1. Determine the present value index for this investment?

a. 1.00 b. 0.95 c. 1.25 d. 1.05

2. Determine the net present value for this investment?

a. P(118,145) b. P118,145 c. P19,875 d. P(19,875)

Reference no: EM132886315

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