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The following data are accumulated by Geddes Company in evaluating the purchase of $124,100 of equipment, having a four-year useful life Net Cash Flow Year 1 Year 2 Year 3 Year 4 Year 1 N 3 4 in 5 6 Net Income $35,000 21,000 10,000 (1,000) Present Value of $1 at Compound Interest 6% 0.943 0.909 0.890 0.840 0.792 0.747 0.705 10% 12% 15% 20% 0.893 0.870 0.833 0.694 $59,000 45,000 34,000 23,000 0.826 0.797 0.756 0.751 0.712 0.683 0.636 0.621 0.567 0.564 0.507 0.432 0.658 0.579 0.572 0.482 0.497 0.402 0.335

The following data are accumulated by Geddes Company in evaluating the purchase of $124,100 of equipment, having a four-year useful life Net Cash Flow Year 1 Year 2 Year 3 Year 4 Year 1 N 3 4 in 5 6 Net Income $35,000 21,000 10,000 (1,000) Present Value of $1 at Compound Interest 6% 0.943 0.909 0.890 0.840 0.792 0.747 0.705 10% 12% 15% 20% 0.893 0.870 0.833 0.694 $59,000 45,000 34,000 23,000 0.826 0.797 0.756 0.751 0.712 0.683 0.636 0.621 0.567 0.564 0.507 0.432 0.658 0.579 0.572 0.482 0.497 0.402 0.335

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $124,100 of equipment, having a four-year useful life: Net Cash Flow Year 1 Year 2 Year 3 Year 4 Year 1 2 3 4 5 6 7 8 9 10 $35,000 21,000 10,000 (1,000) Present Value of $1 at Compound Interest 6% Net Income 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 12% 0.893 0.797 0.712 15% 0.870 S 0.756 0.658 0.572 $59,000 45,000 34,000 23,000 20% 0.833 0.694 0.579 0.482 0.636 0.567 0.497 0.402 0.507 0.432 0.335 0.452 0.376 0.279. 0.404 0.327 0.233 0.361 0.284 0.194 0.322 0.247 0.162 a. Assuming that the desired rate of return is 10%, 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 Amount to be invested Net present value
Transcribed Image Text:Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $124,100 of equipment, having a four-year useful life: Net Cash Flow Year 1 Year 2 Year 3 Year 4 Year 1 2 3 4 5 6 7 8 9 10 $35,000 21,000 10,000 (1,000) Present Value of $1 at Compound Interest 6% Net Income 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 12% 0.893 0.797 0.712 15% 0.870 S 0.756 0.658 0.572 $59,000 45,000 34,000 23,000 20% 0.833 0.694 0.579 0.482 0.636 0.567 0.497 0.402 0.507 0.432 0.335 0.452 0.376 0.279. 0.404 0.327 0.233 0.361 0.284 0.194 0.322 0.247 0.162 a. Assuming that the desired rate of return is 10%, 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 Amount to be invested Net present value
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