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Net Present Value Method, Present Value Index, and Analysis United Bankshores, Inc. wishes to evaluate three capital investment proposals by using the net present value
Net Present Value Method, Present Value Index, and Analysis
United Bankshores, Inc. wishes to evaluate three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows:
Branch Office Expansion | Computer System Upgrade | Install Internet Bill-Pay | |||||
Amount to be invested | $527,952 | $397,512 | $206,060 | ||||
Annual net cash flows: | |||||||
Year 1 | 251,000 | 186,000 | 103,000 | ||||
Year 2 | 233,000 | 167,000 | 71,000 | ||||
Year 3 | 213,000 | 149,000 | 52,000 |
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 |
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