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Category > Accounting Posted 21 Apr 2017 My Price 12.00

Net Present Value Method

Net Present Value Method, Present Value Index, and Analysis
United Bankshores, Inc. wishes to evaluate three capital investment proposals by using the net present
value method. Relevant data related to the proposals are summarized as follows:
Branch
Computer
Install
Office
System
Internet
Expansion
Upgrade
Bill-Pay
Amount to be invested $762,994 $591,414 $281,481 Year 1 369,000 273,000 173,000 Year 2 343,000 246,000 119,000 Year 3 314,000 218,000 87,000 Annual net cash flows: 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 10%, 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.
Branch Office
Computer System
Install Internet BillExpansion
Upgrade
Pay
Present value of net cash flow
total
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
Branch Office Expansion
Computer System Upgrade
Install Internet Bill-Pay

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SuperTutor
(15)
Status NEW Posted 21 Apr 2017 01:04 AM My Price 12.00

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