Net Present Value Method, Present Value Index, and Analysis

United Bankshores, Inc. wishes to evaluate three capitalinvestment proposals by using the net present value method.Relevant data related to the proposals are summarized asfollows:

	Branch Office Expansion	Computer System Upgrade	Install Internet Bill-Pay
Amount to be invested	$837,326		$465,641		$258,271
Annual net cash flows:
	Year 1	320,000		218,000		141,000
	Year 2	298,000		196,000		97,000
	Year 3	272,000		174,000		71,000

Present Value of $1 at CompoundInterest
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 is6%, prepare a net present value analysis for each proposal. Use thepresent value of $1 table above. If required, use the minus sign toindicate a negative net present value. If required, round to thenearest dollar.

	Branch Office Expansion	Computer System Upgrade	Install Internet Bill-Pay
Present value of net cash flow total	$	$	$
Amount to be invested	$	$	$
Net present value	$	$	$

2. Determine a present value index for eachproposal. If required, round your answers to two decimalplaces.

	Present Value Index
Branch Office Expansion
Computer System Upgrade
Install Internet Bill-Pay