Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $160,000 of equipment, having a four-year useful life: Net Cash Flow X Open spreadsheet $46,000 30,000 Year 3 12,000 Year 4 3,500 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. Year 1 Net present value X Year 2 Net Income a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. If required, round to the nearest dollar. b. Would management be likely to look with favor on the proposal? Yes $86,000 70,000 52,000 43,500 the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%.

The folowing data are eccumulated by Gedoes Company in eveluativg the purchase of $100,000 ef equipment, Aaving a four vear useful lifel Net present yalue x b. Whild manegement be likely to fork aith farar on the proposal? , the net present volue indichtes that the retarn in the proposit is then the manimum desired nate of retiven ia isps