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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
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 $57,600 and has an estimated $6,000 salvage value. Assume Peng requires a 5% 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. Round your present value factor to 4 decimals.) Amount x PV Factor = Present Value Cash Flow Annual cash flow Residual value $ 6,000 Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Required information [The following information applies to the questions displayed below. Project A requires a $380,000 initial investment for new machinery with a five-year life and a salvage value of $36,500. The company uses straight-line depreciation. Project A is expected to yield annual net income of $25,700 per year for the next five years. Compute Project A's payback period. Choose Numerator: Cost of investment Payback Period 7 Choose Denominator: = Payback Period 1 Annual net cash flow Payback period 380,000 $ 380,000 = 1.00 years Required information (The following information applies to the questions displayed below.) Project A requires a $380,000 initial investment for new machinery with a five-year life and a salvage value of $36,500. The company uses straight-line depreciation. Project A is expected to yield annual net income of $25,700 per year for the next five years. Compute Project A's accounting rate of return. Choose Numerator: Annual after-tax net income Accounting Rate of Return 1 Choose Denominator: = 11 Annual average investment 25,7001$ 380,000/= Accounting Rate of Return Accounting rate of return 6.76 %
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