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The following data are accumulated by Geddes Company in evaluating the purchase of $118,100 of equipment, having a four-year useful life Year 1 Year 2
The following data are accumulated by Geddes Company in evaluating the purchase of $118,100 of equipment, having a four-year useful life Year 1 Year 2 Year 3 Year 4 Net Income Net Cash Flow $31,000 $52,000 40,000 9,000 30,000 (1,000) 20,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 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 Year 0.705 0.432 0.335 0.376 0.279 0.564 0.513 0.467 0.424 0.386 0.665 0.627 0.592 0.558 0.507 0.452 0.404 0.361 0.322 0.327 0.284 0.233 0.194 0.162 10 0.247 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 Present value of net cash flow Amount to be invested Net present value than the minimum desired rate of reum of 6% b. Would management be likely to look with favor on the proposal because the net present value indicates that the return on the proposals
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