net present value of this investment. (PV
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**QS 11-17 (Algo) Net Present Value of Annuity and Salvage Value LO P3**
Pablo Company is considering buying a machine that will yield an income of $3,100 and net cash flow of $14,700 per year for three years. The machine costs $45,900 and has an estimated $11,100 salvage value. Pablo requires a 10% return on its investments. Compute the net present value of this investment. [PV of $1, FV of $1, PVA of $1, and FVA of $1] (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round your present value factor to 4 decimals.)
| | Net Cash Flows | x | PV Factor | = | Present Value of Net Cash Flows |
|------------------|----------------|---|-----------|---|---------------------------------|
| Years 1-3 | $ 14,700 | x | | = | $ 0 |
| Year 3 salvage | $ 11,100 | x | | = | $ 0 |
| Totals | | | | | |
| Initial investment | | | | = | |
| Net present value | | | | = | |
In this setup, you calculate the present value of net cash flows by multiplying the net cash flows by the present value factors from the provided tables. The totals and calculations for the net present value will depend on the filled-in present value factors and multiplication results.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54a221a2-e802-426b-b767-276968f73d19%2Fdb80b6a0-d1e1-4c91-9ccd-76084080ffcc%2Fb2d52k_processed.png&w=3840&q=75)
Transcribed Image Text:**QS 11-17 (Algo) Net Present Value of Annuity and Salvage Value LO P3**
Pablo Company is considering buying a machine that will yield an income of $3,100 and net cash flow of $14,700 per year for three years. The machine costs $45,900 and has an estimated $11,100 salvage value. Pablo requires a 10% return on its investments. Compute the net present value of this investment. [PV of $1, FV of $1, PVA of $1, and FVA of $1] (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round your present value factor to 4 decimals.)
| | Net Cash Flows | x | PV Factor | = | Present Value of Net Cash Flows |
|------------------|----------------|---|-----------|---|---------------------------------|
| Years 1-3 | $ 14,700 | x | | = | $ 0 |
| Year 3 salvage | $ 11,100 | x | | = | $ 0 |
| Totals | | | | | |
| Initial investment | | | | = | |
| Net present value | | | | = | |
In this setup, you calculate the present value of net cash flows by multiplying the net cash flows by the present value factors from the provided tables. The totals and calculations for the net present value will depend on the filled-in present value factors and multiplication results.
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