Net Present Value Method, Internal Rate of Return Method, and Analysis The management of Quest Media...

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Net Present Value Method, Internal Rate of Return Method, and Analysis The management of Quest Media Inc. is considering two

10 7.360 6.145 5.650 5.019 4.192 The radio station requires an investment of $1,056,350, while the TV station requires an inv

Net present value 1b. Compute a present value index for each project. If required, round your answers to two decimal places.

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Answer 1

Answer #1

NPV = Present value of cash inflows - Present value of cash outflows

	Radio Station	TV Station
Present value of annual net cash flows	1172900	2472600
Less amount to be invested	1056350	2368860
Net Present Value	116550	103740

	Radio Station	TV Station
PV Index = Present value of cash inflows/Initial investment	1.11033275	1.04379322

	Radio Station	TV Station
Present value annuity factor	2.855	3.037
IRR	15%	12%

Radio Station is better

A В 1 2 NPV Present value of cash inflows Present value of cash outflows Radio Station TV Station 4 5 Present value of annual

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