Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. The investment costs $54,900 and has an estimated $10,200 salvage value. Assume Peng requires a 15% 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.) Select Chart Present Value Cash Flow Annual cash flow Residual value Net present value Amount x PV Factor

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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[The following information applies to the questions displayed below.]
Peng Company is considering an investment expected to generate an average net income after
taxes of $3,400 for three years. The investment costs $54,900 and has an estimated $10,200
salvage value.
Assume Peng requires a 15% 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.)
Cash Flow
Annual cash flow
Residual value
Select Chart
Net present value
Amount x PV Factor
=
Present Value
Transcribed Image Text:Required Information [The following information applies to the questions displayed below.] Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. The investment costs $54,900 and has an estimated $10,200 salvage value. Assume Peng requires a 15% 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.) Cash Flow Annual cash flow Residual value Select Chart Net present value Amount x PV Factor = Present Value
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