Accounting Assignment | College Homework Help

  1. Net Present Value Method

    The following data are accumulated by Paxton Company in evaluating the purchase of $160,300 of equipment, having a four-year useful life:

    Net Income Net Cash Flow
    Year 1 $41,000 $69,000
    Year 2 25,000 53,000
    Year 3 12,000 40,000
    Year 4 (1,000) 27,000
    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 15%, 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. If required, use the minus sign to indicate a negative net present value.

    Connect with a professional writer in 5 simple steps

    Please provide as many details about your writing struggle as possible

    Academic level of your paper

    Type of Paper

    When is it due?

    How many pages is this assigment?

    Present value of net cash flow $
    Amount to be invested $
    Net present value $

    b. Would management be likely to look with favor on the proposal?

    The net present value indicates that the return on the proposal is   than the minimum desired rate of return of 15%.

Check My Work2 more Check My Work uses remaining.