Net Present Value Method, Present Value Index, and Analysis Donahue Industries Inc. wishes to evaluate three...

  

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Net Present Value Method, Present Value Index, and Analysis Donahue Industries 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: Product Line Distribution Amount to be invested Expansion $776,780 Computer Facilities Network $527,450 $303,366 Annual net cash flows: Year 1 350,000 259,000 165,000 Year 2 326,000 233,000 114,000 Year 3 298,000 207,000 83,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 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 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 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 Required: 1. Assuming that the desired rate of return is 12%, prepare a net present value analysis for each project. Use the present value of $1 table presented above in your computations. If the net present value is negative, enter a negative amount. Product Line Expansion Distribution Facilities Computer Network Present value of net cash flow total 784,548 Amount to be invested 776,780 Net present value 7,768 564,372 297,299 527,450 36,922 303,366 -6,067 2. Determine a present value index for each proposal. Round your answers to two decimal places. Present Value Index (Rounded) Product Line Expansion Distribution Facilities Computer Network 3. The distribution facilities has the largest present value index. Thecomputer network has the lowest net present value and it returns less invested than both the product line and distribution facilities ' as revealed by the present value indexes. The present value index for the computer network indicating that it does not meet the minimum rate of return standard. present value per dollar is less than 1, Net Present Value Method, Present Value Index, and Analysis Donahue Industries 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: Product Line Distribution Amount to be invested Expansion $776,780 Computer Facilities Network $527,450 $303,366 Annual net cash flows: Year 1 350,000 259,000 165,000 Year 2 326,000 233,000 114,000 Year 3 298,000 207,000 83,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 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 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 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 Required: 1. Assuming that the desired rate of return is 12%, prepare a net present value analysis for each project. Use the present value of $1 table presented above in your computations. If the net present value is negative, enter a negative amount. Product Line Expansion Distribution Facilities Computer Network Present value of net cash flow total 784,548 Amount to be invested 776,780 Net present value 7,768 564,372 297,299 527,450 36,922 303,366 -6,067 2. Determine a present value index for each proposal. Round your answers to two decimal places. Present Value Index (Rounded) Product Line Expansion Distribution Facilities Computer Network 3. The distribution facilities has the largest present value index. Thecomputer network has the lowest net present value and it returns less invested than both the product line and distribution facilities ' as revealed by the present value indexes. The present value index for the computer network indicating that it does not meet the minimum rate of return standard. present value per dollar is less than 1,