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do show working of how answers are gotten Net Present Value Method, Present Value Index, and Analysis for a service company Continental Railroad Company is
do show working of how answers are gotten
Net Present Value Method, Present Value Index, and Analysis for a service company 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 $811,289 $495,741 $263,469 Annual net cash flows: Year 1 258,000 369,000 343,000 314,000 Year 2 Year 3 232,000 173,000 119,000 87,000 206,000 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 ON 0.592 0.424 0.361 0.194 0.284 10 0.386 0.558 0.162 0.322 0.247 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 I 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 present value, it returns less present value per dollar invested than does the present value indexes. The present value index for the meet the minimum rate of return standard. has the largest net as revealed by the is less than 1, indicating that it does not Step by Step Solution
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