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:

	Fort Collins		Boulder
Total present value of net cash flow	$290,700		$328,830
Amount to be invested	(285,000)		(339,000)
Net present value	$5,700		$(10,170)

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

	Fort Collins	Boulder
Total present value of net cash flow	$	$
Amount to be invested	$	$
Present value index

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