The following data are accumulated by Zadok Company in evaluating the purchase of $370,000 of equipment, having a four-year useful life:

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 appearing in Exhibit 1 of this chapter.
b. Would management be likely to look with favor on the proposal?Explain.

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Net Income Net Cash Flow Year 1 Year 2 Year 3 Year 4 $67,500 47,500 (12,500) (12,500) $160,000 140,000 80,000 80,000