First United Bank Inc. is evaluating three capital investment projects by using the net present value method.
Question:
First United Bank Inc. is evaluating three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows:
Instructions
1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each project. Use the present value of $1 table appearing in this chapter (Exhibit 2).
2. Determine a present value index for each project. Round to two decimal places.
3. Which project offers the largest amount of present value per dollar of investment? Explain.
Exhibit 2:
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Step by Step Answer:
To calculate the net present value NPV for each project we need to discount the annual net cash flow...View the full answer
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Related Book For 
Accounting
ISBN: 978-1285743615
26th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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