Double K Doughnuts has computed the net present value for capital expenditure at two locations

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

Blue Springs Lee’s Summit

Total present value of net cash flow $540,750 $484,800

Less amount to be invested 525,000 505,000

Net present value $  15,750 $ (20,200)

a. Determine the present value index for each proposal.

b. Which location does your analysis support?

Answer: