Net Present Value Method The following data are accumulated by Paxton Company in evaluating the purchase of $136,800 of equipment, having a four-year useful life: Year 1 Year 2 Year 3 Year 4 Year Net Income Net Cash Flow $33,000 $56,000 20,000 43,000 10,000 32,000 (1,000) 22,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 0.558 0.386 0.322 0.247 0.162 0.482 6 a. Assuming that the desired rate of return is 12%, determine the net present value for the pro the nearest dollar. If required, use the minus sign to indicate a negative net present value Present value of net cash flow 6% 10% 12% 15% 20% 0.943 0.870 0.833 0.893 0.797 0.712 0.756 0.694 0.909 0.826 0.751 0.683 0.621 0.564 0.579 0.636 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.567 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.513 0.507 0.452 0.404 0.361 0.322 0.482 0.402 0.335 0.279 0.233 0.194 10.162 0.467 0.424 0.386 a. Assuming that the desired rate of return is 12%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Present value of net cash flow Amount to be invested Net present value b. Would management be likely to look with favor on the proposal? than the minimum desired rate of return of 12%. The net present value indicates that the return on the proposal is