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:

Line Item Description	Maintenance Equipment	Ramp Facilities	Computer Network
Amount to be invested	$680,211	$434,006	$219,133
Annual net cash flows:
Year 1	260,000	192,000	122,000
Year 2	242,000	173,000	84,000
Year 3	221,000	154,000	61,000

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 6%, 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.

Line Item Description	Maintenance Equipment	Ramp Facilities	Computer Network
Total present value of net cash flow	646200	464386	241046
Less amount to be invested	680211	434006	219133
Net present value	-34011	30380	21913

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

Line Item Description	Present Value Index
Maintenance Equipment	fill in the blank 10
Ramp Facilities	fill in the blank 11
Computer Network	fill in the blank 12