=+PR 26-2B Cash payback period, net present value method, and analysis objs. 2, 3

✔ 1.

b. Plant Expansion, $11,100 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:

New Maintenance Acquire Route Yard Railcars Expansion Amount to be invested $14,000,000 $45,000,000 $25,000,000 Annual net cash flows:

Year 1 7,400,000 32,000,000 18,500,000 Year 2 6,000,000 24,500,000 14,500,000 Year 3 5,500,000 15,800,000 10,800,000 Instructions 1. 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.