Pablo Company is considering buying a machine that will yield income of $2,700 and net cash flow of $18,400 per year for three years. The machine costs $58,500 and has an estimated $11,400 salvage value. Pablo requires a 5% 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.) Years 1-3 Totals Net present value Present Value of Net Cash Flows X PV Factor Net Cash Flows $ 0 = 0 = = =

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Pablo Company is considering buying a machine that will yield income of $2,700 and net cash flow of $18,400 per year for
three years. The machine costs $58,500 and has an estimated $11,400 salvage value. Pablo requires a 5% 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.)
Years 1-3
Totals
Net present value
Present Value of
Net Cash Flows
X
PV Factor
Net Cash Flows
$
0
=
0
=
=
=
Transcribed Image Text:Pablo Company is considering buying a machine that will yield income of $2,700 and net cash flow of $18,400 per year for three years. The machine costs $58,500 and has an estimated $11,400 salvage value. Pablo requires a 5% 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.) Years 1-3 Totals Net present value Present Value of Net Cash Flows X PV Factor Net Cash Flows $ 0 = 0 = = =
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education