2:43 Week 4 - Assignment B 1. EX.12.01.ALGO 2. EX.12.07.ALGO Progress: 2/2 items Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $107,700 of equipment, having a four-year useful life: Net Income Year 1 $38,000 Year 2 23,000 Year 3 11,000 Year 4 (1,000) Net Cash Flow $64,000 49,000 37,000 25,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 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 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 presented above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Present value of net cash flow Amount to be invested Net present value b. Would management be likely to look with favor on the proposal? Yes, because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%. Previous Assignment Score: 0.0% All work saved. Save and Exit Submit Assignment for Grading AA v2.cengagenow.com 2:43 Week 4 - Assignment B 1. EX.12.01.ALGO 2. EX.12.07.ALGO Progress: 1/2 items Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Amount of investment Useful life Estimated residual value Estimated total income over the useful life Project A Pro $44,000 4 years 0 $5,720 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A % Project Z % AA v2.cengagenow.com Next