Net present value method

The following data are accumulated by Waiola Company in evaluating the purchase of $$103,700$ of equipment, having a $4-$year useful life:

YearNet IncomeNet Cash FlowYear $1$$$34,000$$$58,000$Year $221,00045,000$Year $310,00034,000$Year $4(1,000)23,000$

Present Value of $$1$ at Compound InterestYear$6\%10\%12\%15\%20\%10\mathrm{.}9430\mathrm{.}9090\mathrm{.}8930\mathrm{.}8700\mathrm{.}83320\mathrm{.}8900\mathrm{.}8260\mathrm{.}7970\mathrm{.}7560\mathrm{.}69430\mathrm{.}8400\mathrm{.}7510\mathrm{.}7120\mathrm{.}6580\mathrm{.}57940\mathrm{.}7920\mathrm{.}6830\mathrm{.}6360\mathrm{.}5720\mathrm{.}48250\mathrm{.}7470\mathrm{.}6210\mathrm{.}5670\mathrm{.}4970\mathrm{.}40260\mathrm{.}7050\mathrm{.}5640\mathrm{.}5070\mathrm{.}4320\mathrm{.}33570\mathrm{.}6650\mathrm{.}5130\mathrm{.}4520\mathrm{.}3760\mathrm{.}27980\mathrm{.}6270\mathrm{.}4670\mathrm{.}4040\mathrm{.}3270\mathrm{.}23390\mathrm{.}5920\mathrm{.}4240\mathrm{.}3610\mathrm{.}2840\mathrm{.}194100\mathrm{.}5580\mathrm{.}3860\mathrm{.}3220\mathrm{.}2470\mathrm{.}162$

a$.$Assuming that the desired rate of return is $20\%,$ 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.

Line Item DescriptionAmountPresent value of net cash flow$fill in the blank $1$Amount to be investedfill in the blank $2$Net present value$fill in the blank $3$

b$.$Would management be likely to look with favor on the proposal?

YesNo

$,$ because the net present value indicates that the return on the proposal is

greaterless

than the minimum desired rate of return of $20\%.$