Net Present Value Method, Present Value Index, and AnalysisFirst 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:BranchComputerATMOfficeSystemKioskExpansionUpgradeExpansionAmount to be invested$863,421$519,486$311,214Annual net cash flows:Year 1358,000243,000165,000Year 2333,000219,000114,000Year 3304,000194,00083,000Present Value of $1 at Compound InterestYear6%10%12%15%20%0.9430.9090.8930.8700.83320.8900.8260.7970.7560.69430.8400.7510.7120.6580.57940.7920.6830.6360.5720.48250.7470.6210.5670.4970.4020.7050.5640.5070.4320.33570.6650.5130.4520.3760.27980.6270.4670.4040.3270.2330.5920.4240.3610.2840.194100.5580.3860.3220.2470.162 100.5580.3860.3220.2470.162Required:1. Assuming that the desired rate of return is 6%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net presentvalue. If required, round to the nearest dollar.Branch OfficeComputer SystemATM KioskExpansionUpgradeExpansionPresent value of net cash flow%24$totalAmount to be invested$$Net present value$2. Determinepresent value index for each proposal. If required, round your answers to two decimal places.Present Value IndexBranch Office ExpansionComputer System UpgradeInstall Internet Bill-Pay3. Which proposal offers the largest amount of present value per dollar of investment?

Net present value (NPV) is the difference between the present value of cash inflows and the present…

value. If required, round to the nearest dollar. Branch Office Computer System ATM Kiosk Expansion Upgrade Expansion Present value of net cash flow total Amount to be invested %$4 $ 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

value. If required, round to the nearest dollar. Branch Office Computer System ATM Kiosk Expansion Upgrade Expansion Present value of net cash flow total Amount to be invested %$4 $ 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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