Net present value method, present value index, and analysis for a service company Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: Maintenance Equipment Amount to be invested i $818,515 Ramp Facilities $513,250 Computer Network $235,521 Annual net cash flows: Year 1 Year 2 Year 3 313,000 225,000 131,000 291,000 203,000 90,000 266,000 180,000 66,000 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 Previous 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 0.5721 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 6%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. a required, usi to indicate a negative net present value. If required, round to the nearest dollar. Total present value of net cash flow Less amount to be invested Net present value Maintenance Equipment Ramp Facilities Computer Network Required: 1. Assuming that the desired rate of return is 6%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest dollar. Total present value of net cash flow Less amount to be invested Net present value Maintenance Equipment Ramp Facilities Computer Network 2. Determine a present value index for each proposal. If required, round your answers to two decimal places. Present Value Index Maintenance Equipment Ramp Facilities Computer Network 3. The has the largest present value index. Although ( invested than does the C , as revealed by the present value indexes. The present value index for the has the largest net present value, it returns less present value per dollar is less than 1, indicating that it does not meet the minimum rate of return standard.