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Net Present Value Method, Present Value Inder, and Analysis for a Service Company Continental Railroad Company is evaluating three capital investment proposals by using
Net Present Value Method, Present Value Inder, 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 Amount to be invested Annual net cash flows Year 1 Year 21 Year 3 Ramp Facilities Computer Network $8,000,000 $20,000,000 $9,000,000 4,000,000 12,000,000 6.000.000 3,500,000 10,000,000 5,000,000 2,500,000 9,000,000 4,000,000 Present Value of $1 at Compound Interest Year 0% 10% 12% 15% 20% 1 0.943 0.909 0.093 0.870 0.833 2 0.890 0.026 0.797 0.756 0.694 . 0.040 0.751 0.712 0.638 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.367 0.497 0.402 0.705 0.564 0.507 0.432 0,335 7 0.665 0.513 0.452 0.376 0.279 B 0.627 0.467 0.404 0.327 0.233 2 0.592 0.424 0.361 0.284 10 0,558 0.306 0.322 0.247 0.194 0.162 Required 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 a negative net present value. If required, round to the nearest dollar
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