Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $130,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $46,000 $78,500 Year 2 29,000 61,500 Year 3 11,000 43,500 Year 4 5,000 37,500 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. If required, round to the nearest dollar. Net present value $ 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 10%.
Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $130,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $46,000 $78,500 Year 2 29,000 61,500 Year 3 11,000 43,500 Year 4 5,000 37,500 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. If required, round to the nearest dollar. Net present value $ 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 10%.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 7E
Related questions
Question
100%
The following data are accumulated by Geddes Company in evaluating the purchase of $130,000 of equipment, having a four-year useful life:
Net Income | Net Cash Flow | |||
Year 1 | $46,000 | $78,500 | ||
Year 2 | 29,000 | 61,500 | ||
Year 3 | 11,000 | 43,500 | ||
Year 4 | 5,000 | 37,500 |
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
- Assuming that the desired
rate of return is 10%, determine the net present value for the proposal. If required, round to the nearest dollar.Net present value $ - Would management be likely to look with favor on the proposal?
Yes
, the net present value indicates that the return on the proposal isgreater
than the minimum desired rate of return of 10%.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning