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		Ramp Facilities		Computer Network
Amount to be invested		$768,279		$498,703		$239,770
Annual net cash flows:
	Year 1	386,000		278,000		166,000
	Year 2	359,000		250,000		115,000
	Year 3	328,000		222,000		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

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 Ramp Facilities Computer Network $239,770 $760,270 $498,702 Amount to be invested Annual net cash Voar 1 166,000 Year 2 285,000 359,000 328,000 278,000 250.000 222.000 115.000 83,000 Year 3 Yaar Present Value of $1 at Compound Interest . 6% 10% 129 15W 20 0.943 0.909 0.893 0.070 0.035 0.89 0.826 0.797 0.755 0.604 1 2 2 3 0.640 0.751 0.732 0.859 0.579 4 0.792 0.683 0.635 0.572 0.482 5 0.747 0.621 0.497 0.567 0.507 0.102 0.335 6 0.705 0.564 0.432 7 0.665 0.5.) 0.452 0.375 0.279 8 0.622 0.4044 0.327 0.233 0.467 0.424 9 0.592 0.284 0.361 0.322 0.194 0.102 10 0.550 0.386 0.247 Required: 1. Assuming that the desired rate of return is 20%, prepare a not present value analysis for each proposal Use the present value of si table above. If required, use the minus sign to indicate a negative netresont value. If required, round to the nearest dallar. Maintenance Equipment Ramp Facilities Computer Network Total present value of net cash flow Amount to be invested Net present value 2. Determine a present value index for each proposal. If required, round your answers to two decimal places. Present Value Index Maintenance Equipment Rama Facilities Computer Network