Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $90,100 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $29,000 $49,000 Year 2 Year 3 Year 4 18,000 38,000 8,000 28,000 (1,000) 19,000 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 Year 1 2 3 4 0.792 0.683 0.636 0.572 5 0.747 0.621 0.567 0.497 0.482 0.402 0.335 6 0.705 0.507 0.432 0.564 0.513 7 0.665 0.452 0.376 0.279 0.627 0.467 0.404 0.327 9 0.592 0.424 0.233 0.194 0.361 0.284 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 10%, 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 not present value 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.658 0.579 0.712 0.636 4 0.792 0.683 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.424 0.361 0.284 0.592 0.558 0.194 10 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. It 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? because the net present value indicates that the return on the proposal is of 10 than the minimum desired rate of return Check My Work more Check My Work