Net Present Value Method

The following data are accumulated by Geddes Company in evaluating the purchase of $$142,000$ of equipment, having a four$-$year useful life:

Present Value of $$1$ at Compound Interest

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.

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 $6\%.$