3) Instructions

Required

Net present value method, present value index, and analysis for a service company Continental Railroad Company is evaluating three capital investment proposais by using the net present value method. Relevant data related to the proposals are summarized as followst 1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for a ach proposal. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest dollar. 2. Determine a present value index for each soposal. If required, round your answers to two decimal places. 3. The has the largest present value index. Although has the largest net present value, it returns less present value per dollar invested than does the 1. as revealed by the present value indexes. The present value index for the is less than 1, indicating that it: does not meet the minimum rate of return standard