Donahue Industries Inc. wishes to evaluate three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows:

	Product Line Expansion	Distribution Facilities	Computer Network
Amount to be invested	$704,707		$475,794		$260,653
Annual net cash flows:
	Year 1	365,000		270,000		161,000
	Year 2	339,000		243,000		111,000
	Year 3	310,000		216,000		81,000

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 20%, state the net present value analysis for each project. Use the present value of $1 table presented above in your computations. If the net present value is negative, enter a negative amount.

	Product Line Expansion	Distribution Facilities	Computer Network
Present value of net cash flow total	$fill in the blank 1		$fill in the blank 2		$fill in the blank 3
Amount to be invested	fill in the blank 4		fill in the blank 5		fill in the blank 6
Net present value	$fill in the blank 7		$fill in the blank 8		$fill in the blank 9

2. Determine a present value index for each proposal. Round your answers to two decimal places.

	Present Value Index (Rounded)
Product Line Expansion	fill in the blank 10
Distribution Facilities	fill in the blank 11
Computer Network	fill in the blank 12

3. The

product line expansiondistribution facilitiescomputer networkdistribution facilities

has the largest present value index. The

product line expansiondistribution facilitiescomputer networkcomputer network

has the lowest net present value and it returns

morelessthe sameless

present value per dollar invested than

does the product line expansiondoes the distribution facilitiesboth the product line and distribution facilitiesboth the product line and distribution facilities

, as revealed by the present value indexes. The present value index for the

product line expansiondistribution facilitiescomputer networkcomputer network

is less than 1, indicating that it does not meet the minimum rate of return standard.