Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $160,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $50,000 $90,000 Year 2 22,000 62,000 Year 3 11,500 51,500 Year 4 5,000 45,000 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. Open spreadsheet Assuming that the desired rate of return is 20%, determine the net present value for the proposal. If required, round to the nearest dollar. Net present value $fill in the blank 2 Would management be likely to look with favor on the proposal? YesNo , the net present value indicates that the return on the proposal is greaterless than the minimum desired rate of return of 20%.
The following data are accumulated by Geddes Company in evaluating the purchase of $160,000 of equipment, having a four-year useful life:
| Net Income | Net Cash Flow | |||
| Year 1 | $50,000 | $90,000 | ||
| Year 2 | 22,000 | 62,000 | ||
| Year 3 | 11,500 | 51,500 | ||
| Year 4 | 5,000 | 45,000 |
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.
Open spreadsheet
Assuming that the desired
| Net present value | $fill in the blank 2 |
Would management be likely to look with favor on the proposal?
YesNo
, the net present value indicates that the return on the proposal is
greaterless
than the minimum desired rate of return of 20%.
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