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Present Value Index

Dip N Dunk Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows:

	Ft. Collins		Boulder
Total present value of net cash flow	$315,180		$349,440
Amount to be invested	(306,000)		(364,000)
Net present value	$9,180		$(14,560)

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

	Ft. Collins	Boulder
Total present value of net cash flow	$fill in the blank 1	$fill in the blank 2
Amount to be invested	$fill in the blank 3	$fill in the blank 4
Present value index	fill in the blank 5	fill in the blank 6

b. Which location does your analysis support? (If both present value indexes are the same, either location will grade as correct.)

Ft. CollinsBoulder

, because the net present value index is

less thangreater than

1.