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   Net present value method

   The following data are accumulated by Geddes Company in evaluating the purchase of $140,000 of equipment, having a four-year useful life:

   	Net Income		Net Cash Flow
   Year 1	$45,000		$80,000
   Year 2	29,000		64,000
   Year 3	14,500		49,500
   Year 4	3,000		38,000

   This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

   Open spreadsheet

   1. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. If required, round to the nearest dollar.

      Net present value

      $fill in the blank 2

   2. Would management be likely to look with favor on the proposal?

      YesNo

      , the net present value indicates that the return on the proposal is

      greaterless

      than the minimum desired rate of return of 15%.

Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of equipment, having a four-year useful life: Year 1 Year 2 Year 3 Year 4 DATA Net Income $45,000 29,000 14,500 3,000 Net Cash Flow $80,000 64,000 49,500 38,000 Cost of equipment Desired rate of return $140,000 15% Using formulas and cell references, perform the required analysis, and input your answer into the Amount column. Transfer the numeric result for the green entry cell (D18) into the appropriate fields in CNOWv2 for grading. Amount Formula a. Net present value