1. Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows:

   		Maintenance Equipment		Ramp Facilities		Computer Network
   Amount to be invested		$783,831		$465,824		$227,076
   Annual net cash flows:
   	Year 1	353,000		240,000		145,000
   	Year 2	328,000		216,000		100,000
   	Year 3	300,000		192,000		73,000

   Present Value of $1 at Compound Interest
   Year	6%	10%	12%	15%	20%
   1	0.943	0.909	0.893	0.870	0.833
   2	0.890	0.826	0.797	0.756	0.694
   3	0.840	0.751	0.712	0.658	0.579
   4	0.792	0.683	0.636	0.572	0.482
   5	0.747	0.621	0.567	0.497	0.402
   6	0.705	0.564	0.507	0.432	0.335
   7	0.665	0.513	0.452	0.376	0.279
   8	0.627	0.467	0.404	0.327	0.233
   9	0.592	0.424	0.361	0.284	0.194
   10	0.558	0.386	0.322	0.247	0.162

   Required:

   1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each 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.

   	Maintenance Equipment	Ramp Facilities	Computer Network
   Total present value of net cash flow	$	$	$
   Amount to be invested
   Net present value	$	$	$

   2. Determine a present value index for each proposal. If required, round your answers to two decimal places.

   	Present Value Index
   Maintenance Equipment
   Ramp Facilities
   Computer Network

   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 , 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.