The management of London Corporation is considering the purchase of a new machine costing $750,000....
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The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's desired rate of return is 6%. The present value factors for $1 at compound interest of 6% for one through five years are 0.943, 0.890, 0.840, 0.792, and 0.747, respectively. In addition to this information, use the following data in determining the acceptability in this situation:
| Year | Income from Operations | Net Cash Flow | |
| 1 | $37,500 | $187,500 | |
| 2 | 37,500 | 187,500 | |
| 3 | 37,500 | 187,500 | |
| 4 | 37,500 | 187,500 | |
| 5 | 37,500 | 187,500 | |
The present value index for this investment is ___
A. 1.00
B. 1.05
C. 0.95
D. 1.25
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