The following data are accumulated by Parker Company in evaluating the purchase of $126,000 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. Use the table of the present value of $1 appearing in Exhibit 1 of this chapter.
b.  Would management be likely to look with favor on the proposal? Explain.

Exhibit 1:

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Net Cash Flow Net Income Year 1 Year 2 Year 3 Year 4 $65,000 $33,500 24,500 10,500 (6,500) 56,000 42,000 25,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 6. 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 8. 0.627 0.467 0.404 0.327 0.233 9. 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162