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eBook Show Me How Net Present Value Method The following data are accumulated by Paxton Company in evaluat purchase of $165,800 of equipment, having a four years of life Net Income Net Cash Flow Year 1 $41,000 $69,000 Year 2 25,000 53,000 Year 12,000 40,000 Year a (1,000) 27,000 Present Value of Si at Compound Interest Year 10. 12% 15% 20. 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.66 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 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 10 0.55 0.386 0322 0.247 0.162 0.826 2 a. Assuming that the desired rate of retum is 10%, determine the net present value for the proposal is the table of the most Show Me How Wear 61% 10% 1596 20W 129 0.a 1 0.3 0.890 0.833 0.870 0.756 2 0.797 0.604 3 0.840 0.909 0.826 0.751 0,683 0.621 0.712 4 0.792 0.658 0.572 0.497 0.432 0.636 0.567 0.507 0.579 0.402 0.402 0.315 0.742 6 0.564 2 0.705 0.665 0.627 0.592 0.279 B 0.233 0.513 0.467 0.424 0.386 0,452 0.404 0.361 0.322 0.376 0.327 0.254 0.247 0.14 10 0.55 0.162 a. Assuming that the desire rate of return is 10%, determine the net present value for the proposal Use the table of the present value of st presented to required, round to the nearest dolla. It required, use the mission to indicate a negative net present value Present value of net cash flow Amount to be invested Net present value b. Would management betely to look with favor on the proposal? The ne present value indicates that the return on the proposal is than the minimum desired rate of return of 10%

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