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Present value index for investment

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The management of Retz Corporation is considering the purchase of a new machine costing $500,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation: The present value index for this investment is:

a. 0.70

b. 0.95

c. 1.05

d. 1.30

Reference no: EM13972932

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