Net Present Value Method, Present Value Index, and Analysis for a service company Continental Railroad Company is evalua

[answerhappygod]

Net Present Value Method Present Value Index And Analysis For A Service Company Continental Railroad Company Is Evalua 1 (32.93 KiB) Viewed 19 times

Net Present Value Method Present Value Index And Analysis For A Service Company Continental Railroad Company Is Evalua 2 (32.93 KiB) Viewed 19 times

Net Present Value Method Present Value Index And Analysis For A Service Company Continental Railroad Company Is Evalua 3 (31.05 KiB) Viewed 19 times

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: Ramp Computer Maintenance Equipment Facilities Network Amount to be invested i $691,384 $478,691 Annual net cash flows: Year 1 284,000 204,000 Year 2 264,000 184,000 Year 3 241,000 163,000 Present Value of $1 at Compound Interesti 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 0.621 0.567 0.497 0.402 0.564 0.705 0.507 0.432 0.335 0.665 0.513 0.452 0.279 0.376 0.627 0.467 0.404 0.327 0.233 Prmanus Year 1 2 3 4 5 6 7 B $215,220 122,000 84,000 61,000
8 0.627 0.467 0.404 0.327 0.233 0.194 9 0.592 0.424 0.361 0.284 0.558 10 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. Computer Network Maintenance Equipment 253,612 X Ramp Facilities 192,372 X Present value of net cash flow totali X Amount to be invested x $ X -234,960 X x Net present value X 2. Determine a present value index for each proposal. If required, round your answers to two decimal places. Present Value Index Maintenance Equipment X X Ramp Facilities X Computer Network 3. The computer network ✔has the largest present value index. Although ramp facilities ✔has the largest net present value, it returns less present value per dollar invested than does the computer network ✔as revealed by the present value indexes. The present value index for the maintenance equipment ✓is less than 1, indicating that it does not meet the minimum rate of return standard.