Net Present Value Method The following data are accumulated by Wocester Hat Company in evaluating...
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Net Present Value Method The following data are accumulated by Wocester Hat Company in evaluating the purchase of $104,500 of equipment, having a four-year useful life: Present Value of $1 at Compound Interest 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 presented above. If required, use the minus sign to indicate a negative net present value. b. Would management be likely to look with favor on the proposal? Feedback Check My Work a. Multiply the present value factor for each year by that year's net cash flow. Subtract the initial investment from the total present value of the net cash flow. b. Recall whether management will be more favorable to a positive net present value or a negative net present value
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