Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $117,800 of equipment, having a four year useful life: Net Income Net Cash Flow Year 1 $36,000 $61,000 Year 2 22,000 47,000 Year 3 11,000 35,000 Year 4 (1,000) 24,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% Year 1 0.943 0.909 0.870 0.833 2 0.890 0.826 0.893 0.797 0.712 0.756 3 0.840 0.658 0.751 0.683 0.694 0.579 0.482 4 0.792 0.636 0.572 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 0.279 0.452 0.404 0.376 0.327 8 0.627 0.467 0.233 9 0.592 0.361 0.284 0.194 0.424 0.386 10 0.558 0.322 0.247 0.162 a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of St presented above. It 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 15%, determine the net present value for the proposat. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. It required, use the minus sign to indicate a negative not 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 15% Check My Work Previous Next BOOK Show Me How Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $117,800 of equipment, having a four year useful life Net Income Net Cash Flow Year 1 $36,000 $61,000 Year 2 22.000 47.000 Year 3 11,000 35,000 Year 4 (1,000) 24,000 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 0.497 0.402 0.567 0.507 0.705 6 0.564 0.335 7 0.665 0.513 0.452 0.404 0.432 0.376 0.327 0.279 0.233 0.627 0.467 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 15%, determine the net present value for the proposal. Use the table of the present value of si presented above. If Previous Next Check My Work 5 0.497 0.402 0.747 0.705 0.621 0.564 6 0.567 0.507 0,452 0.335 0.432 0.376 7 0.665 0.513 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 0.162 10 0.558 0.386 0.322 0.247 a. Assuming that the desired rate of return is 15%, 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 130,713 X Amount to be invested 117,800 Net present value 12,913 X 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%. Feedback Check My Work a. Multiply the present value of $1 factor for each year (Refer Exhibit 2 in the text.) by that year's net cash flow. Subtract the amount to be invested from the total present value of the net cash flow. Will management be more favorable to a positive net present value or a negative net present value? b. Consider the time value of money. Previous Next Check My Work Save and Fit Submit Assignment for Grad Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $117,800 of equipment, having a four year useful life: Net Income Net Cash Flow Year 1 $36,000 $61,000 Year 2 22,000 47,000 Year 3 11,000 35,000 Year 4 (1,000) 24,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% Year 1 0.943 0.909 0.870 0.833 2 0.890 0.826 0.893 0.797 0.712 0.756 3 0.840 0.658 0.751 0.683 0.694 0.579 0.482 4 0.792 0.636 0.572 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 0.279 0.452 0.404 0.376 0.327 8 0.627 0.467 0.233 9 0.592 0.361 0.284 0.194 0.424 0.386 10 0.558 0.322 0.247 0.162 a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of St presented above. It 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 15%, determine the net present value for the proposat. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. It required, use the minus sign to indicate a negative not 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 15% Check My Work Previous Next BOOK Show Me How Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $117,800 of equipment, having a four year useful life Net Income Net Cash Flow Year 1 $36,000 $61,000 Year 2 22.000 47.000 Year 3 11,000 35,000 Year 4 (1,000) 24,000 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 0.497 0.402 0.567 0.507 0.705 6 0.564 0.335 7 0.665 0.513 0.452 0.404 0.432 0.376 0.327 0.279 0.233 0.627 0.467 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 15%, determine the net present value for the proposal. Use the table of the present value of si presented above. If Previous Next Check My Work 5 0.497 0.402 0.747 0.705 0.621 0.564 6 0.567 0.507 0,452 0.335 0.432 0.376 7 0.665 0.513 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 0.162 10 0.558 0.386 0.322 0.247 a. Assuming that the desired rate of return is 15%, 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 130,713 X Amount to be invested 117,800 Net present value 12,913 X 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%. Feedback Check My Work a. Multiply the present value of $1 factor for each year (Refer Exhibit 2 in the text.) by that year's net cash flow. Subtract the amount to be invested from the total present value of the net cash flow. Will management be more favorable to a positive net present value or a negative net present value? b. Consider the time value of money. Previous Next Check My Work Save and Fit Submit Assignment for Grad