1a)Compute this investment’s net present value. 1b)Assume that instead of a zero salvage value, as shown above, the investment has a salvage value of $25,000. Compute the investment's net present value.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
1a)Compute this investment’s
1b)Assume that instead of a zero salvage value, as shown above, the investment has a salvage value of $25,000. Compute the investment's net present value.
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Required Informatlon
Use the following information for the Quick Study below.
[The following information applies to the questions displayed below.]
Following Is Information on an investment considered by Hudson Co. The investment has zero
salvage value. The company requires a 3% return from its Investments.
Investment A1
Initial investment
$(350, 000)
Expected net cash flows in:
120,000
122,000
97,000
Year 1
Year 2
Year 3
QS 24-11 Net present value LO P3
Compute this investment's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use approprlate
factor(s) from the tables provided. Round all present value factors to 4 decimal places.)
Present Value of 1
Cash Flow
Present Value
at 3%
Year 1
Year 2
Year 3
Totals
2$
Amount invested
Net present value
$
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