Net Present Value Method The following data are accumulated by Paxton Company in evaluating the purchase of $133,600 of equipment, having a four-year useful life Net Income Net Cash Flow Year! $44,000 $75,000 Year 2 27,000 58,000 Year 13,000 44,000 Year 4 (1,000) 29,000 Present Value of $1 at Compound Interest Year 6% 10% 129 15% 20% 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 0.41 5 0.742 0.621 0.567 0.497 0.402 6 0.705 0.564 0.502 0.432 0.335 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 0386 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. If required, use the minus sign to indicate a negative net present value Present value of net cash flow Amount to be invested Year Year 4 Year 13,000 44,000 (1,000) 29,000 Present Value of $1 at Compound Interest 104 12 159 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 3 4 5 6 0.705 0.564 0.507 0.335 7 0.665 0.432 0.376 0.513 0.452 0.279 8 0.627 0.467 0.404 0.233 9 0.592 0.327 0.284 0.424 0.361 10 0.558 0.19 0.162 0.386 0.322 0.242 2. Assuming that the desired rate of return is 12%, determine the net present value for the proposal. Use the table or the present value of 1 presented above. Ir 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? The net present value indicates that the return on the proposals than the minimum desired rate of return of 12%