# A La Mode, Inc. is considering one of two investment options. Option 1 is a $40,000 investment

## Question:

Assume there is sufficient capital to fund only one of the projects. Determine which project should be selected, comparing the

(a) Net present values and

(b) Present value indices of the two projects, assuming a minimum rate of return of 10%. Round the present value index to two decimal places. Use the table of present values in the chapter.

Net Present Value

What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...

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