Peng Company is considering an investment expected to generate an average net inco after taxes $2,800 for three years. The investment costs $57,000 and has an estimated $9,600 salvage value. Assume Peng requires a 10% return on its investments. Compute the net present value of this investment. Assume the company uses straight-line depreciation. (PV of $1. EV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign.) Cash Flow Annual cash flow Residual value Select Chart Net present value Amount x PV Factor Present Value $ 0 0
Peng Company is considering an investment expected to generate an average net inco after taxes $2,800 for three years. The investment costs $57,000 and has an estimated $9,600 salvage value. Assume Peng requires a 10% return on its investments. Compute the net present value of this investment. Assume the company uses straight-line depreciation. (PV of $1. EV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign.) Cash Flow Annual cash flow Residual value Select Chart Net present value Amount x PV Factor Present Value $ 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Peng Company is considering an investment expected to generate an average net income after taxes of
$2,800 for three years. The investment costs $57,000 and has an estimated $9,600 salvage value.
Assume Peng requires a 10% return on its investments. Compute the net present value of this investment. Assume the
company uses straight-line depreciation. (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.)
Amount x PV Factor
Cash Flow
Annual cash
flow
Residual value
Select Chart
Net present value
Present Value
= $
0
0
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