The following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four-year useful life:

___________________________Net Income Net Cash Flow

Year 1...................................$42,500................$80,000

Year 2....................................27,500..................65,000

Year 3....................................12,500..................50,000

Year 4......................................2,500..................40,000

A. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of $1 appearing in Exhibit 2 of this chapter.

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