The following data are accumulated by Dillon Company in evaluating the purchase of $39,600 of equipment, having a four-year useful life:

a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of $1 appearing in Exhibit 2 of this chapter.
b. Would management be likely to look with favor on the proposal? Explain.

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Net Cash Flow $14,000 18,000 17,000 12,000 tIncome Year 1 Year 2 Year 3 Year 4 $ 4,100 8,100 7,100 2,100