Question
Net Present Value Method The following data are accumulated by Waiola Company in evaluating the purchase of $150,000 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 $150,000 of equipment, having a 4-year useful life:
| Year | Net Income | Net Cash Flow |
|---|---|---|
| Year 1 | $40,000 | $77,500 |
| Year 2 | 22,500 | 60,000 |
| Year 3 | 13,500 | 51,000 |
| Year 4 | (5,000) | 42,500 |
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.
a. Assuming that the desired rate of return is 20%, determine the net present value for the proposal. If required, round to the nearest dollar.
| Net present value | $ |
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Financial Accounting A Valuation Emphasis
Authors: John S. Hughes, Frances L. Ayres, Robert E. Hoskin
1st Edition
0471203599, 978-0471203599
