Capital Rationing Decision Involving Four Proposals

Kopecky Industries Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows:

Project Name	Sierra		Tango		Uniform		Victor
	Investment	$806,674	Investment	$2,625,030	Investment	$1,583,350	Investment	$966,680
Year	Income from Operations	Net Cash Flows	Income from Operations	Net Cash Flows	Income from Operations	Net Cash Flows	Income from Operations	Net Cash Flows
1	$77,000	$220,000	$270,000	$900,000	$220,000	$500,000	$108,000	$400,000
2	77,500	220,000	270,275	900,000	220,000	500,000	108,000	400,000
3	78,000	220,000	270,550	900,000	220,000	500,000	108,000	400,000
4	78,500	220,000	270,825	900,000	220,000	500,000	108,000	400,000
5	79,000	220,000	271,100	900,000	220,000	500,000	108,000	400,000
Total	$390,000	$1,100,000	$1,352,750	$4,500,000	$1,100,000	$2,500,000	$540,000	$2,000,000

For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 12% and the present value of $1 table above. If required, use the minus sign to indicate a subtraction or negative net present value.

Select the proposal accepted for further analysis.	Proposal Tango	Proposal Victor
Present value of net cash flow total	$	$
Amount to be invested
Net present value	$	$

5. Compute the present value index for each of the proposals in part (4). Round to two decimal places.

Select the proposal to compute present value index.	Proposal Tango	Proposal Victor
Present value index (rounded)