Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Chapter 26 Homework eBook Show Me How Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $113,200

image text in transcribedimage text in transcribed

Chapter 26 Homework eBook Show Me How Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $113,200 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $34,000 $57,000 Year 2 21,000 44,000 Year 3 10,000 33,000 Year 4 (1,000) 22,000 Present Value of $1 at Compound Interest 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 Year 6% 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 0.402 5 0.747 0.621 0.567 0.497 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 Check My Work Previous Next > Next Chapter 26 Homework eBook Show Me How 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 6%, 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? because the net present value indicates that the return on the proposal is than the minimum desired rate of return of 6%. Check My Work Previous Next

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial & Managerial Accounting

Authors: Carl Warren

12th Edition

1285534646, 978-1133952428

More Books

Students also viewed these Accounting questions

Question

Assembly language x86 program

Answered: 1 week ago