Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $136,800 of equipment, having a four-year useful life: Net Income Net Cash Flow

Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $136,800 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $40,000 $67,000 Year 2 24,000 52,000 Year 3 12,000 39,000 Year 4 (1,000) 26,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 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 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 12%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. Present value of net cash flow $fill in the blank 1 Amount to be invested $fill in the blank 2 Net present value $fill in the blank 3

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