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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
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 Computer Equipment Network $643,114 $204,922 Amount to be invested Annual net cash flows: Year 1 Year 2 Year 3 Year 1 2 3 4 5 6 7 8 00 9 10 Required: 6% 0.943 Present Value of $1 at Compound Interest 10% 0.890 0.840 0.792 0.747 0.705 0.665 0,627 0.592 0.558 Net present value 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 310,000 288,000 264,000 Ramp Facilities Maintenance Equipment Computer Network 12% Total present value of net cash flow Less amount to be invested 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0,361 0.322 Ramp Facilities $400,294 223,000 201,000 178,000 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 20% 0.833 0.694 0.579 0.482 TAIL CHAND 0.402 1. Assuming that the desired rate of return is 20%, 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 Maintenance Equipment Ramp Facilities Computer Network LIDON 643,114 0.335 0.279 0.233 0.194 0.162 143,000 99,000 72,000 2. Determine a present value index for each proposal. If required, round your answers to two decimal places. Present Value Index 400,294 204,922 K
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