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		Net Cash Flow
Year 1	$49,000		$81,500
Year 2	24,500		57,000
Year 3	13,000		45,500
Year 4	7,000		39,500

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

2. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. If required, round to the nearest dollar.

   Net present value

   $

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

   
   

Answer rating: 100% (QA)

1 To calculate the net present value NPV of the proposal we first need to discount each years net ca... View the full answer