The following data are accumulated by Paxton Company in evaluating the purchase of $89,500 of equipment, having a four-year useful life:

Net Present Value Method The following data are accumulated by Paxton Company in evaluating the purchase of $89,500 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 Year 2 Year 3 Year 4 $30,000 18,000 9,000 (1,000) $50,000 39,000 29,000 20,000 Present Value of $1 at Compound Interest 1090 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 Year 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 2 4 8 9 10 a. Assuming that the desired rate of return is 12%, 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 investec 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 12%