Following is information on an investment considered by Hudson Co. Assume the investment has a salvage value of $34,000. The company requires a 6% return from its investments.

Investment A1
Initial investment		($270,000	)
Expected net cash flows in year (excluding salvage value):
1		155,000
2		122,000
3		79,000

Compute the investment's net present value. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places. Round Present Value of Net Cash Flows to the nearest whole dollar.)

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	Net Cash Flows	Present Value of 1 at 6%	Present Value of Net Cash Flows
Year 1
Year 2
Year 3
Totals	$0		$0
Amount invested
Net present value			$0

Beyer Company is considering the purchase of an asset for $240,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year.

	Year 1				Year 2				Year 3				Year 4				Year 5				Total
Net cash flows		$	60,000			$	36,000			$	60,000			$	150,000			$	25,000			$	331,000

Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal places.)

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Year	Cash inflow (outflow)	Cumulative Net Cash Inflow (outflow)
0	$(240,000)
1
2
3
4
5
Payback period =

Beyer Company is considering the purchase of an asset for $235,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Assume that Beyer requires a 12% return on its investments. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Year 1

Year 2

Year 3

Year 4

Year 5

Total

Net cash flows

$

87,000

$

46,000

$

72,000

$

158,000

$

58,000

$

421,000

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Year	Net Cash Flows	Present Value of 1 at 12%	Present Value of Net Cash Flows
1
2
3
4
5
Totals	$0		$0
Amount invested
Net present value			$0

B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $336,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 134,400 units of the equipments product each year. The expected annual income related to this equipment follows.

Sales	$	210,000
Costs
Materials, labor, and overhead (except depreciation on new equipment)		112,000
Depreciation on new equipment		28,000
Selling and administrative expenses		21,000
Total costs and expenses		161,000
Pretax income		49,000
Income taxes (30%)		14,700
Net income	$	34,300

1.

Compute the payback period.

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Payback Period
Choose Numerator:	/	Choose Denominator:	=	Payback Period
	/		=	Payback period
			=	0

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Accounting Rate of Return
Choose Numerator:	/	Choose Denominator:	=	Accounting Rate of Return
	/		=	Accounting rate of return
				0

Phoenix Company can invest in each of three cheese-making projects: C1, C2, and C3. Each project requires an initial investment of $330,000 and would yield the following annual cash flows. (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.)

	C1				C2				C3
Year 1		$	46,000			$	130,000			$	214,000
Year 2			142,000				130,000				94,000
Year 3			202,000				130,000				82,000
Totals		$	390,000			$	390,000			$	390,000

(1)

Assuming that the company requires a 8% return from its investments, use net present value to determine which projects, if any, should be acquired. (Round your answers to the nearest whole dollar.)

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Project C1
Initial Investment
Chart Values are Based on:
i =
Year	Cash Inflow	x	PV Factor	=	Present Value
1				=
2				=
3				=
0
Project C2
Initial Investment
Year	Cash Inflow	x	PV Factor	=	Present Value
1				=
2				=
3				=
0
Project C3
Initial Investment
Year	Cash Inflow	x	PV Factor	=	Present Value
1				=
2				=
3				=
0