Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four-year useful le: Net Income Nat Cash Flow Year 1 $42,500 $80,000 Year 2 65,000 Year 3 27,500 12,500 2,500 50,000 Year 4 40,000 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 36 0.322 0.247 0.162 Year 104 12% 209 1 0.943 0.909 0.893 0.833 0.870 0.756 2 0.890 0.826 0.797 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.561 0.507 0.432 0.335 0.279 7 0.665 0.513 0.452 0.376 B 0.627 0.467 0.404 0.327 0.233 0.424 0.361 0.284 0.592 0.558 0.194 0.162 10 0.386 0.322 0.247 a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. If required, round to the nearest dollar. Use the table of the present value of $1 presented above. Present value of net cash flow X 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%