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	$575,292		$377,600		$191,050
Annual net cash flows:
	Year 1	286,000		200,000		123,000
	Year 2	266,000		180,000		85,000
	Year 3	243,000		160,000		62,000

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 is15%, prepare a net present value analysis for each proposal. Usethe present value of $1 table above. If required, use the minussign to indicate a negative net present value. If required, roundto the nearest 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

3. Which proposal offers the largest amount ofpresent value per dollar of investment?