Net Present Value Method

The following data are accumulated by Wocester Hat Company in evaluating the purchase of $86,100 of equipment, having a four-year useful life:

	Net Income (Loss)		Net Cash Flows
Year 1	$30,000		$51,000
Year 2	18,000		39,000
Year 3	9,000		30,000
Year 4	(1,000)		20,000

Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. 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	$