net present value method, present value index, and analysis for a service company

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 $755,304 $257,672 Annual net cash flows: Year 1 310,000 143,000 Year 2 288,000 99,000 Year 3 264,000 72,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.497 0.402 0.705 0.621 0.567 0.564 0.507 0.513 0.452 0.376 0.432 0.335 0.665 0.279 0.627 0.467 0.404 0.327 0.233 Year 1 2 3 4 5 6 7 8 $487,392 208,000 187,000 166,000 0.003 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 value. If required, round to the nearest dollar Maintenance Equipment Ramp Facilities Computer Network Present value of net cash flow total Amount to be invested Net present value 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 as revealed by the present value Indexes. The present value index for the above. If required, use the minus sign to indicate a negative net present has the largest net present value, it retums less present value per dollar invested than does the is less than 1, indicating that it does not meet the minimum rate of return standard