Evergreen Security Bank, Inc., wishes to evaluate three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows:

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 1).
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 1:

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Branch Office Expansion Install Computer System Internet Bill-Pay $360,000 Upgrade Amount to be invested Annual net cash flows: Year 1 Year 2 $425,000 $650,000 230,000 210,000 175,000 325,000 300,000 120,000 Year 3 170,000 290,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 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 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 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