Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $130,000 of equipment, having a four-year useful life: Net Income Year 1 $43,500 Year 2 28,500 Year 3 Year 4 15,000 2,000 Net Cash Flow $76,000 61,000 47,500 34,500 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. 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? Yes , the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 6%. Feedback Check My Work a. The net present value method compares the amount to be invested with the present value of the net cash inflows.