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Net Present Value Method The following data are accumulated by Waiola Company in evaluating the purchase of $130,000 of equipment, having a 4-year useful life:
Net Present Value Method The following data are accumulated by Waiola Company in evaluating the purchase of $130,000 of equipment, having a 4-year useful life: Net Cash Flow Year 1 Year 2 Year 3 $44,500 30,000 14,000 (3,500) This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Year 4 Open spreadsheet Net Income $77,000 62,500 46,500 36,000 a. Assuming that the desired rate of return is 6%, determine the net present value for the proposal. If required, round to the nearest dollar. Yes 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 greater than the minimum desired rate of return of 6%.
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