Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pena Company is considering an investment of $28,065 that provides net cash flows of $8,100 annually for four years. (a) If Pena Company requires a

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Pena Company is considering an investment of $28,065 that provides net cash flows of $8,100 annually for four years. (a) If Pena Company requires a 5% return on its investments, what is the net present value of this investment? (PV of $1, FV of $1, PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of this investment? Net Cash Flows PV Factor Present Value of Net Cash Flows Years 1-4 S 0 Net present value = Required B h Pena Company is considering an investment of $28,065 that provides net cash flows of $8,100 annually for four years. (a) If Pena Company requires a 5% return on its investments, what is 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. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of this investment? Net Cash Flows X PV Factor Present Value of Net Cash Flows S 0 Years 1-4 = F NIA Postal Required B Initial investment Net present value Present value of cash inflows Pena Company is considering an investment of $28,065 that provides net cash flows of $8,100 annually for four years. (a) If Pena Company requires a 5% return on its investments, what is 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. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment? Complete this question by entering your answers in the tabs below. Required A Required B Based on net present value, should Pena Company make this investment? Based on net present value, should Pena Company make this investment? Required A Yes No Table B.3 Present Value of an Annuity of 1 p= [1 - 1/(1+1)"]/i Rate 12% Periods 10% 15% 2% 3% 8% 9% Periods 1% 4% 7% 6% 5% 1 0.8929 0.8696 0.9174 0.9091 0.9901 0.9804 1 0.9709 0.9615 0.9524 0.9434 0.9259 0.9346 16257 2 1.7355 1.6901 1.7591 1.9416 1.8080 2 1.9704 1.9135 1.8861 1.8334 1.7833 1.8594 3 2.4018 2.2832 2.4869 2.5771 2.5313 2.6243 3 2.9410 2.8839 2.8286 2.7751 2.6730 2.7232 4 3.0373 2.8550 3.3121 3.1699 3.2397 4 3.9020 3.8077 3.6299 3.4651 3.3872 3.7171 3.5460 S 3.6048 3.3522 3.7908 3.9927 3.8897 4.2124 4.1002 S 4.7135 4.5797 4.4518 4.8534 4.3295 6 4.1114 3.7845 4.6229 4.3553 4.4859 5.0757 4.7665 5.7955 5.6014 5.2421 4.9173 6 5.4172 7 4.8684 4.5638 4.1604 5.2064 5.0330 5.5824 5.3893 7 6.4720 6.7282 6.2303 6.0021 5.7864 5.3349 4.9676 4.4873 8 5.7466 5.5348 5.9713 7.6517 7.3255 6.7327 6.4632 8 7.0197 6.2098 6.8017 9 5.9952 5.3282 6.5152 6.2469 4.7716 7.1078 9 8.5660 7.4353 8.1622 7.7861 5.7590 6.1446 6.4951 6.4177 10 7.3601 7,0236 6.7101 5.6502 5.0188 7.7217 8.1109 8.5302 10 9.4713 8.9826 11 5.9377 7.4987 5.2337 7.1390 6.8052 8.3064 7.8869 11 9.7868 8.7605 10.3676 9.2526 7.5361 7.1607 6.8137 6.1944 5.4206 12 8.3838 8.8633 12 9.9540 10.5753 9.3851 11.2551 12.1337 7.9427 8.3577 7.9038 7.4869 8.8527 7.1034 6.4235 5.5831 13 9.3936 13 10.6350 11.3484 9.9856 10.5631 8.7455 14 7.3667 9.2950 8.2442 7.7862 6.6282 9.8986 12.1062 14 13.0037 11.2961 5.7245 5.8474 9.1079 8.5595 8.0607 15 7.6061 6.8109 10.3797 9.7122 15 12.8493 11.1184 13.8651 11.9379 9.4466 8.3126 10.1059 7.8237 6.9740 5.9542 16 10.8378 16 11.6523 14.7179 12.5611 13.5777 8.8514 9.1216 9.7632 8.5436 8.0216 6.0472 11.2741 10.4773 7.1196 17 17 15.5623 14.2919 13.1661 12.1657 9.3719 10.8276 10.0591 8.7556 8.2014 7.2497 18 11.6896 6.1280 18 16.3983 14.9920 13.7535 12.6593 9.6036 10.3356 8.9501 11.1581 8.3649 7.3658 19 12.0853 6.1982 19 15.6785 17.2260 14.3238 13.1339 10.5940 9.8181 9.1285 8.5136 6.2593 20 7.4694 11.4699 12.4622 20 16.3514 13.5903 18.0456 14.8775

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

What is the environment we are trying to create?

Answered: 1 week ago

Question

How can we visually describe our goals?

Answered: 1 week ago