90.2K

Verified Solution

Link Copied!

net present vaule method

Net Present Value Method, Present Value Index, and Analysis First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: Branch Computer ATM Office System Kiosk Expansion Upgrade Expansion Amount to be invested $714,194 $469,924 $259,442 Annual net cash flows: Year 1 355,000 249,000 149,000 Year 2 330,000 224,000 103,000 Year 3 302,000 199,000 75,000 Present Value of $1 at Compl und Interest 10% 12% 15% Year 6% 20% 1 0.909 0.893 0.870 0.833 0.943 0.890 2 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 0.402 5 0.747 0.621 0.567 0.497 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 0.294 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: > 1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each project. 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 Computer Office System ATM Kiosk Expansion Upgrade Expansion Present value of net cash flow total Less amount to be invested: Net present value 2. Determine a present value index for each project. If required, round your answers to two decimal places. Present Value Index Branch Office Expansion Computer System Upgrade Install Internet Bal Pay 3. Which project offers the largest amount of present value per dollar of investment

Answer & Explanation Solved by verified expert

See Answer