Solution-Prepare a net present value analysis for each

Prepare a net present value analysis for each project

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Reference no: EM132690547

Problem - Net present value method, present value index, and analysis

Evergreen Security Bank, Inc., wishes to evaluate three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows:

	Branch Office Expansion	Computer System Upgrade	Install Internet Bill-Pay
Amount to be invested	$425,000	$650,000	$360,000
Annual net cash flows:
Year 1	230,000	325,000	175,000
Year 2	210,000	300,000	155,000
Year 3	170,000	290,000	120,000

Instructions -

1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each project.

2. Determine a present value index for each project. Round to two decimal places.

3. Which project offers the largest amount of present value per dollar of investment? Explain.

Reference no: EM132690547

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Prepare a net present value analysis for each project

Reference no: EM132690547

Reference no: EM132690547

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