The following data are accumulated by Paxton Company in evaluating the purchase of $130,100 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 Year 2 Year 3 $38,000 $64,000 23,000 49,000 11,000 37,000 (1,000) 25,000 Present Value of $1 at Compound Interest 109 12% 15% 20% Year 4 Year 6% 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 B 0.627 0.467 0.404 0.327 0.233 9 0.592 0.194 0.361 0.284 0.424 0.386 10 0.558 0.322 0.247 0.162 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 0.005 05113 0.452 0.376 02279 8 0.627 0.467 0.404 0.327 0.233 . 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 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 slon 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? Yes The net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 12%