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Required information Use the following information for the Quick Study below 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 $3,500 for three years. The investment costs $49,800 and has an estimated $8,400 salvage value. QS 25-8 Net present value LO P3 Assume Peng requires a 15% return on its investments. Compute the net present value of this investment. Assume the company uses straight-line depreciation. (PVofSIEV of $1, PVAOfSL and FVAof$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 Amountx PV FactorPresent Value Net present value TABLE B.1 Present Value of 1 Rate 1% 2% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.81630.7938 0.7722 0.7513 0.7118 0.6575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.70840.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.74730.7130 0.6806 0.64990.6209 0.56740.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.70500.6663 0.6302 0.59630.5645 0.5066 0.4323 0.9327 0.8706 0.81310.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.45230.3759 0.9235 0.8535 0.78940.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.40390.3269 0.9143 0.8368 0.76640.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.18270.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 03118 0.2584 02145 0.1784 .1486 0.1037 0.05m 0.7798 0.6095 0.4776 0.37510.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.09940.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 10 12 13 14 15 16 17 18 19 20 25 30 35 40 Used to compute the present value of a no n future amount. For example: How much would you need to invest to ay at IOS compoun d sem annually to accumulate S500 n 6 ears from today? Using the factors of n 12 and i 5% ( 12 semannual periods and a semannual rate of 5%), the factor is 05568. You would need to in est S2784 today ($5000 0 5568). TABLE B.3 Present Value of an Annuity of 1 Rate 2% 3% 6% 7% 8% 10% 12% Perlods 9% 0.9901 0.9804 0.97090.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.8861 1.8594 83341.80801.7833 1.7591 1.7355 .6901 1.6257 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.57712.5313 2.4869 2.4018 2.2832 3.9020 3.80773.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 .8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.35534.11143.7845 6.7282 6.4720 6.23036.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 7.65177.3255 7.0197 6.73276.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.78617.4353 7.1078 6.80176.5152 6.24695.9952 5.7590 5.3282 4.7716 9.47138.9826 8.5302 8.1109 7.72177.3601 7.0236 6.7101 6.41776.1446 5.6502 5.0188 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.49877.1390 6.8052 6.4951 5.93775.2337 1.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.94277.5361 7.1607 6.8137 6.19445.4206 2.1337 11.3484 10.6350 9.98569.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 3.003712.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.24427.7862 7.3667 6.6282 5.7245 13.865112.8493 11.9379 11.118410.3797 9.7122 9.10798.5595 8.0607 7.6061 6.8109 5.8474 4.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 6.3983 14.9920 13.7535 2.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 8.0456 16.3514 14.877513.5903 12.4622 11.4699 10.5940 9.81819.1285 8.5136 7.46946.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 0.6748 9.8226 9.0770 7.8431 6.4641 5.8077 22.3965 19.6004 7.2920 15.3725 13.7648 2.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.64428.1755 6.6166 2.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.33171.9246 10.75749.7791 8.2438 6.6418 25 Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. For (n = 10, i = 9%), te PV factor is 6.4177. S2.000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177)

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