The following data are accumulated by Paxton Company in evaluating the purchase of $129,200 of equipment, having a four-year useful life: Net Income $43,000 Net Cash Flow $73,000 Year 1 Year 2 26,000 56,000 42,000 Year 3 13,000 Year 4 (1,000) 28,000 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 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 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 0.558 10 0.386 0.322 0.247 0.162 Previou! Check My Work 2 more Check My Work uses remaining. Email Instructor Save and Edit All work saved Submit Ass Anment Score: 33.33% Book Air 8 0.627 0.467 0.404 0.327 0.284 0.233 0.194 9 0.592 0.424 0.361 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 20%, 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 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 proposal is than the minimum desired rate of return of 20%. Prime Financial Inc. Is evaluating two capital Investment proposals for a drive-up ATM Kiosk, each requiring an investment of $100,000 and each with an eight-year life and expected total net cash flows of $200,000. Location 1 is expected to provide equal annual net cash flows of $25,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $45,000 Year 5 $24,000 Year 2 34,000 Year 6 18,000 21,000 Year 7 14,000 32,000 Years 12,000 Determine the cash payback period for both location proposals. Location 1 years Year 3 Year 4 Location 2 Years Previous Next > Check My Work 2 more Check My Work uses remaining Book