4. EX.26-5. ALGO (Algorithmic) Cash Payback Period Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $164,000 and each with an eight-year life and expected total net cash flows of $328,000. Location 1 is expected to provide equal annual net cash flows of $41,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $ 52,000 Year 2 39,000 Year 3 26,000 21,000 Year 4 Year 5 13,000 13,000 Year 6 Year 7 95,000 69,000 Year 8 Determine the cash payback period for both location proposals. Location 1 years Location 2 years The following data are accumulated by Reynolds Company in evaluating the purchase of $124,200 of equipment, having a four-year useful life: Year 1 Year 2 Year 3 Year 4 Net Income Net Cash Flow $36,000 $61,000 22,000 47,000 11,000 35,000 (1,000) 24,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% Year 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 00 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 12%, 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. Present value of net cash flow $ $ Less amount to be invested Net present value $ b. Would management be likely to look with favor on the proposal? The net present value indicates that the return on the proposal is than the minimum desired rate of return of 12%