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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, 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 Ramp Computer Network Equipment Facilities Amount to be invested $706,350 $411,393 $221,421 Annual net cash flows: Year 1 Year 2 Year 3 318,000 296,000 270,000 216,000 194,000 173,000 149,000 103,000 75,000 Present Value of $1 at Compound Interest 1090 12% 15% 0.943 0.909 0.893 0.870 0.890 0.826 0.797 0.756 0.840 0.751 0.712 0.658 0.792 0.683 0.636 0.572 0.747 0.621 0.567 0.497 0.705 0.564 0.507 0.432 0.665 0.513 0.452 0.376 0.627 0.467 0.404 0.327 0.284 0.558 0.386 0.322 0.247 Year 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 6% 0.592 0.424 0.361 10 Required I. 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
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