The following data are accumulated by Geddes Company in evaluating the purchase of $130,000 of equipment,...
The following data are accumulated by Geddes Company in evaluating the purchase of $130,000 of equipment, having a four-year useful life:
| Net Income | Net Cash Flow | |||
| Year 1 | $49,000 | $81,500 | ||
| Year 2 | 24,500 | 57,000 | ||
| Year 3 | 13,000 | 45,500 | ||
| Year 4 | 7,000 | 39,500 | ||
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.
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- Assuming that the desired rate of return is 15%, determine the
net present value for the proposal. If required, round to the
nearest dollar.
Net present value $ - Would management be likely to look with favor on the proposal?
Yes , the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%.
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The following data are accumulated by Geddes Company in
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Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $206,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $44,000 $75,000 Year 2 27,000 58,000 Year 3 13,000 44,000 Year 4 (1,000) 29,000 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...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $139,500 of...
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The following data are accumulated by Geddes Company in evaluating the purchase of $139,600 of equipment,...
The following data are accumulated by Geddes Company in evaluating the purchase of $139,600 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $37,000 $63,000 Year 2 23,000 49,000 Year 3 11,000 37,000 Year 4 (1,000) 25,000 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...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $89,500 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $30,000 $50,000 Year 2 18,000 39,000 Year 3 9,000 29,000 Year 4 (1,000) 20,000 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...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $97,400 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $32,000 $55,000 Year 2 20,000 42,000 Year 3 10,000 32,000 Year 4 (1,000) 21,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 5...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $102,900 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $33,000 $56,000 Year 2 20,000 43,000 Year 3 10,000 32,000 Year 4 (1,000) 22,000 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...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase...
Net Present Value Method
The following data are accumulated by Geddes Company in
evaluating the purchase of $137,200 of equipment, having a
four-year useful life:
Net Income
Net Cash Flow
Year 1
$32,000
$54,000
Year 2
20,000
42,000
Year 3
9,000
31,000
Year 4
(1,000)
21,000
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...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $97,400 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $32,000 $55,000 Year 2 20,000 42,000 Year 3 10,000 32,000 Year 4 (1,000) 21,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 5...
Net Present Value Method
The following data are accumulated by Geddes Company in
evaluating the purchase of $137,200 of equipment, having a
four-year useful life:
Net Income
Net Cash Flow
Year 1
$32,000
$54,000
Year 2
20,000
42,000
Year 3
9,000
31,000
Year 4
(1,000)
21,000
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...
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