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Problem 153
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1.
Branch Office Expansion
Year
Net Cash Flow
1
X
=
2
X
=
3
X
=
Total
Amount to be invested
Net present value
Computer System Upgrade
Year
Net Cash Flow
1
X
=
2
X
=
3
X
=
Total
Amount to be invested
Net present value
Install Internet BillPay
Year
Net Cash Flow
1
X
=
2
X
=
3
X
=
Total
Amount to be invested
Net present value
2.
Present value index
=
Total present value of net cash flow
Amount to be invested
Present value index of branch office:
=
Present value index of computer system:
=
Present value index of Internet billpay:
=
3.
Indicate which of the following statements are true (T) and which are false (F).
a. The computer system upgrade has the largest present value index
b.
The branch office expansion has the largest net present value
c. The computer system upgrade returns less present value per dollar invested
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 Winter '08
 THOMAS
 Accounting

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