The following data are accumulated by Zadok Company in evaluating the purchase of $370,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $67,500 $160,000 Year 2 47,500 140,000 Year 3 (12,500) 80,000 Year 4 (12,500) 80,000 a. Assuming that the desired rate of return is 12%, determine the net present value for the proposal. b. Would management be likely to look with favor on the proposal? Explain.

Management will not look at this investment in equipment favorably, as the net present value of the project is negative, which will decrease shareholder's wealth.

Explanation:

                                    0                   1            2             3              4

Net Cashflows        -370,000     160000      1400008000080000

Discount factor  12%    1               0.8930.7970.7120.636

PV of cashflows       -370000     14285711160756942  50841

NPV-7752    

answer; blank (1) hrm specialists,blank(2); line managers;