The companys hurdle rate is 12. what is the present value, Ask an Expert

Accounting

Mountain Brook Company is considering two investment opportunities whose cash flows are provided below:

Year Investment A Investment B
Year 0 ($15,000) ($9,000)
Year 1 5,000 5,000
Year 2 5,000 4,000
Year 3 5,000 3,000
Year 4 4,000 1,000

The company's hurdle rate is 12%. What is the present value index of Investment A?

A. 0.97
B. 1.00
C. 1.01
D. 1.12

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M966630

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