The following data are accumulated by Reynolds Company in evaluating the purch

The following data are accumulated by Reynolds Company in evaluating the purchase of $104000 of equipment having a four-year useful life: Net Income

Year 1 $38000
Year 2 23000

Year 3 11000

Year 4 (1000)

Net Cash Flow

Year 1 = 64000

Year 2 = 49000

Year 3 = 37000

Year 4 = 25000

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
B.) Would management be likely to look with favor on the proposal? Explain. Present Value of $1 at Compound Interest
Year 1 @ 15% = 0.870
Year 2 @ 15% = 0.756
Year 3 @ 15% = 0.712
Year 4 @ 15% = 0.636