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Net Present Value Method The following data are accumulated by Paxton Company in evaluating the purchase of $127.500 of equipment having for Net Income Net
Net Present Value Method The following data are accumulated by Paxton Company in evaluating the purchase of $127.500 of equipment having for Net Income Net Cash Flow Year 1 $30,000 550,000 Year 2 18,000 39,000 Year 3 9,000 29,000 Year 4 (1,000) 20,000 Present Value of $i at Compound Interest Year 64 109 12% 15% 209 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 7 0.665 0.513 0.452 0.376 0.229 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 0.162 0.247 0.335 Assurning that the desired rate of retum is 10%, determine the net present value for the proposal. Use the table of the present vite of three, and the rest dollar. If required, use the minussion to indicate a negative net present value Present value of net cash now Amount to be invested Net present value 1. Would management be likely to look with favor on the propose than the minimum desiderem The net present value indicates that the return on the proposals
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