=+PR 26-2A Cash payback period, net present value method, and analysis objs. 2, 3

✔ 1.

b. Home &

Garden, $127,158 United Bankshores, Inc. wishes to evaluate three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows:

Branch Computer Install Office System Internet Expansion Upgrade Bill-Pay Amount to be invested . . . . . . . . . . . . . . . . . . . . . . . . $700,000 $475,000 $280,000 Annual net cash flows:

Year 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000 250,000 160,000 Year 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325,000 225,000 110,000 Year 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 200,000 80,000 Instructions 1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each project. Use the present value of $1 table appearing in this chapter.