Ne Present Value Method

The following data are accumulated by Waiola Company in evaluating the purchase

of equipment, having a four$-$year useful life:

DATA

REQUIRED:

Determine the net present value for the proposal

Using formulas and cell references from the problem data, perform the required

analysis. Formulas entered in the green cells show in the orange cells. Transfer

amounts to CNOWv$2$ for grading.

Amount

Formula

Net present valueNet Present Value Method

The following data are accumulated by Waiola Company in evaluating the purchase of $$140,000$ of equipment, having a $4-$year useful life:

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

a$.$ Assuming that the desired rate of return is $6\%,$ determine the net present value for the proposal. If required, round to the nearest dollar.

Net present value $

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

$,$ because the net present value indicates that the return on the proposal is greater $$ than the minimum desired rate of return of $6\%.$