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Net Present Value Method The following data are accumulated by Waiola Company in evaluating the purchase of $130,000 of equipment, having a 4-year useful life: Net Cash Flow Year 1 Year 2 Year 3 $44,500 30,000 14,000 (3,500) 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. Year 4 Open spreadsheet Net Income $77,000 62,500 46,500 36,000 a. Assuming that the desired rate of return is 6%, determine the net present value for the proposal. If required, round to the nearest dollar. Yes Net present value $ b. Would management be likely to look with favor on the proposal? , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 6%.

Net Present Value Method The following dota are accumulated by Walola Company in evoluating the purchase of $130,000 of equipment, having a 4 -ycar uneful life: This information has been collected in the Microsaft Excel Online file. Open the spreadsh ecporiorm the requice inatyus, and input yout answers in the questians below. Open spreadsheet. a. Assuming that the desired rate of return is 6%, determine the net present value for the proponal. II required, round to the nearest dollar. Net present value : b. Woild management be likely to look with favor on the proposal? , becsuse the net present value indicates that the return on the proposal is than the minimum desired rote of roturn of 6%

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