The following data are accumulated by Bannister Company in evaluating the purchase of $48,500 of equipment, having a four-year useful life:

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.) Use the table of the present value of $1 presented above.

Transcribed Image Text:

Net Cash Flow $19,000 23,000 20,000 15,000 Net Income Year 1 Year 2 Year 3 Year 4 $ 6,875 10,875 7,875 2,875 Present Value of S1 at Compound Interest 10% 15% | 20% 0.943 0.909 0.893 0.870 0.833 0.8900.826 0.797 0.756 0.694 0.840 0.75 0.712 0.658 0.579 0.7920.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 0.5920.424 0.36 0.284 0.194 10 0.558 0.3860.322 0.247 0.162 Year 6% 12%