Atlantic Coast Railroad Company wishes to evaluate three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows:

Instructions1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for each proposal. Use the present value of $1 table appearing in this chapter.2. Determine a present value index for each proposal. Round to two decimal places. 3. Which proposal offers the largest amount of present value per dollar of investment?Explain.

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New Maintenance Yard Acquire Railcars Route Expansion Amount to be invested Annual net cash flows: Year 1 Year 2 Year 3 $45,000,000 $14,000,000 $25,000,000 18,500,000 14,500,000 10,800,000 7,400,000 6,000,000 5,500,000 32,000,000 24,500,000 15,800,000