Montana Grill has computed the net present value for capital expenditures for the Billings and Great Falls

Question:

Montana Grill has computed the net present value for capital expenditures for the Billings and Great Falls locations using the net present value method. Relevant data related to the computation are as follows:

.................................................Billings...........................Great falls

Total present value of net cash flow.......$882,000........................$1,050,000

Amount to be invested........................900,000............................750,000

a. Determine the present value index for each proposal. Round to two decimal places.

b. If Montana Grill can fund only one location, which location should be funded?

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...