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 $2,000 for three years. The investment costs $52,200 and has an estimated $11,700 salvage value. QS 25-8 Net present value LO P3 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.) Amount x PV Factor = Present Value Select Chart Present Value of an Annuity Cash Flow Annual cash flow Residual value of 1 Future Value of an Annuity lof 1 Present value of cash inflows Net present value Net present value Present Value of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9803 0.9706 0.9610 0.9515 0.9420 0.9327 0.9235 0.9143 0.9053 0.8963 0.8874 0.8787 0.8700 0.8613 0.8528 0.8444 0.8360 0.8277 0.8195 0.7798 0.7419 0.7059 0.6717 0.9804 0.9612 0.9423 0.9238 0.9057 0.8880 0.8706 0.8535 0.8368 0.8203 0.8043 0.7885 0.7730 0.7579 0.7430 0.7284 0.7142 0.7002 0.6864 0.6730 0.6095 0.5521 0.5000 0.4529 0.9709 0.9615 0.9426 0.9246 0.9151 0.8890 0.8885 0.8548 0.8626 0.8219 0.8375 0.7903 0.8131 0.7599 0.7894 0.7307 0.7664 0.7026 0.7441 0.6756 0.7224 0.6496 0.7014 0.6246 0.6810 0.6006 0.6611 0.5775 0.6419 0.5553 0.6232 0.5339 0.6050 0.5134 0.5874 0.4936 0.5703 0.4746 0.5537 0.4564 0.4776 0.3751 0.4120 0.3083 0.35540.2534 0.3066 0 .2083 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 0.5847 0.5568 0.5303 0.5051 0.4810 0.4581 0.4363 0.4155 0.3957 0.3769 0.2953 0.2314 0.1813 0.1420 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 0.5268 0.4970 0.4688 0.4423 0.4173 0.3936 0.3714 0.3503 0.3305 0.3118 0.2330 0.1741 0.1301 0.0972 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 0.4751 0.4440 0.4150 0.3878 0.3624 0.3387 0.3166 0.2959 0.2765 0.2584 0.1842 0.1314 0.0937 0.0668 0.9259 0.9174 0.8573 0.8417 0.7938 0.7722 0.7350 0.7084 0.6806 0.6499 0.6302 0.5963 0.5835 0.5470 0.5403 0.5019 0.5002 0.4604 0.4632 0.4224 0.4289 0.3875 0.3971 0.3555 0.3677 0.3262 0.3405 0.2992 0.3152 0.2745 0.2919 0.2519 0.2703 0.2311 0.2502 0.2120 0.2317 0.1945 0.2145 0.1784 0.1460 0.1160 0.0994 0.0754 0.06760.0490 0.0460 0.0318 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.3505 0.3186 0.2897 0.2633 0.2394 0.2176 0.1978 0.1799 0.1635 0.1486 0.0923 0.0573 0.0356 0.0221 0.8929 0.8696 0.7972 0.7561 0.7118 0.6575 0 0.5674 0.4972 0.5066 0.4323 0.4523 0.3759 0.4039 0.3269 0.3606 0.2843 0.3220 0.2472 0.2875 0.2149 0.2567 0.1869 0.2292 0.1625 0.2046 0.1413 0.1827 0.1229 0.1631 0.1069 0.1456 0.0929 0.1300 0.0808 0.1161 0.0703 0.1037 0.0611 0.0588 0.0304 0.0334 0.0151 0.01890.0075 0.0107 0.0037 * Used to compute the present value of a known future amount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n= 12 and i= 5% (12 semiannual periods and a semia. = (1 + 1)" Future Value of 1 Rate 7% Periods 1% 2% 3% 4% 5% 6% 8% 9% 10% 12% 15% 1.0000 1.1200 1.1664 1.2544 1.0000 1.0100 1.0201 1.0303 1.0406 1.0510 1.0615 1.0721 1.0829 1.0937 1.1046 1.1157 1.1268 1.1381 1.1495 1.1610 1.1726 1.1843 1.1961 1.2081 1.0000 1.0000 1.0000 1.0200 1.0300 1.0400 1.0404 1.0609 1.0816 1.0612 1.0927 1.1249 1.0824 1.1255 1.1699 1.1041 1.15931.2167 1.1262 1.1941 1.2653 1.1487 1.2299 1.3159 1.1717 1.2668 1.3686 1.1951 1.3048 1.4233 1.21901.3439 1.4802 1.2434 1.3842 1.5395 1.2682 1.4258 1.6010 1.2936 1.4685 1.6651 1.3195 1.5126 1.7317 1.34591.5580 1.8009 1.3728 1.60471.8730 1.4002 1.6528 1.9479 1.4282 1.7024 2.0258 1.4568 1.7535 2.1068 1.4859 1.8061 2.1911 1.6406 2.0938 2.6658 1.8114 2.4273 3.2434 1.9999 2.8139 3.9461 2.2080 3.2620 4.8010 1.0000 1.0500 1.1025 1.1576 1.2155 1.2763 1.3401 1.4071 1.4775 1.5513 1.6289 1.7103 1.7959 1.8856 1.9799 2.0789 2.1829 2.2920 2.4066 2.5270 2.6533 3.3864 4.3219 5.5160 7.0400 1.0000 1.0600 1.1236 1.1910 1.2625 1.3382 1.4185 1.5036 1.5938 1.6895 1.7908 1.8983 2.0122 2.1329 2.2609 2.3966 2.5404 2.6928 2.8543 3.0256 3.2071 4.2919 5.7435 7.6861 10.2857 1.0000 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 2.1049 2.2522 2.4098 2.5785 2.7590 2.9522 3.1588 3.3799 3.6165 3.8697 5.4274 7.6123 10.6766 14.9745 1.0000 1.0000 1.0800 1.0900 1.1881 1.2597 1.2950 1.3605 1.4116 1.4693 1.5386 1.5869 1.6771 1.7138 1.8280 1.8509 1.9926 1.9990 2.1719 2.1589 2.3674 2.3316 2.5804 2.5182 2.8127 2.7196 3.0658 2.9372 3.3417 3.1722 3.6425 3.4259 3.9703 3.7000 4.3276 3.9960 4.7171 4.31575.1417 4.6610 5.6044 6.8485 8.6231 10.0627 13.2677 14.7853 20.4140 2 1.7245 31.4094 1.0000 1.1000 1.2100 1.3310 1.4641 1.6105 1.7716 1.9487 2.1436 2.3579 2.5937 2.8531 3.1384 3.4523 3.7975 4.1772 4.5950 5.0545 5.5599 6.1159 6.7275 10.8347 17.4494 28.1024 45.2593 1.4049 1.5735 1.7623 1.9738 2.2107 2.4760 2.7731 3.1058 3.4785 3.8960 4.3635 4.8871 5.4736 6.1304 6.8660 7.6900 8.6128 9.6463 17.0001 29.9599 52.7996 93.0510 1.0000 1.1500 1.3225 1.5209 1.7490 2.0114 2.3131 2.6600 3.0590 3.5179 4.0456 4.6524 5.3503 6.1528 7.0757 8.1371 9.3576 10.7613 12.3755 14.2318 16.3665 32.9190 66.2118 133.1755 267.8635 1.2202 25 35 1.2824 1.3478 1.4166 1.4889 Used to compute the future value of a known present amount. For example: What is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n = 20 and i = 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4,457.70 ($3,000 x 1.4859). p= [1-(1 + )"): Present Value of an Annuity of 1 Rate Periods - 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 00 ou wn WN 0.9901 0.9804 0.9709 1.9704 1.9416 1.9135 2.9410 2.8839 2.8286 3.9020 3.8077 3.7171 4.8534 4.7135 4.5797 5.7955 5.6014 5.4172 6.7282 6.4720 6.2303 7.6517 7.3255 7.0197 8.5660 8.1622 7.7861 9.4713 8.9826 8.5302 10.3676 9.7868 9.2526 11.2551 10.5753 9.9540 12.1337 11.3484 10.6350 13.0037 12.1062 11.2961 13.8651 12.8493 11.9379 14.7179 13.5777 12.5611 15.5623 14.291913.1661 16.3983 14.9920 13.7535 17.2260 15.6785 14.3238 18.0456 16.3514 14.8775 22.0232 19.5235 17.4131 25.8077 22.3965 19.6004 29.4086 24.9986 21.4872 32.834727.3555 23.1148 0.9615 1.8861 2.7751 3.6299 4.4518 5.2421 6.0021 6.7327 7.4353 8.1109 8.7605 9.3851 9.9856 10.5631 11.1184 11.6523 12.1657 12.6593 13.1339 13.5903 15.6221 17.2920 18.6646 19.7928 0.9524 0.9434 1.8594 1.8334 2.7232 2.6730 3.5460 3.4651 4.3295 4.2124 5.0757 4.9173 5.7864 5.5824 6.4632 6.2098 7.1078 6.8017 7 .7217 7.3601 8.3064 7.8869 8.8633 8.3838 9.3936 8.8527 9.8986 9.2950 10.37979.7122 10.8378 10.1059 11.2741 10.4773 11.6896 10.8276 12.0853 11.1581 12.4622 11.4699 14.093912.7834 15.3725 13.7648 16.3742 14.4982 17.1591 15.0463 0.9346 0.9259 1.8080 1.7833 2.6243 2.5771 3.3872 3.3121 4.1002 3.9927 4.7665 4.6229 5.3893 5.2064 5.9713 5.7466 6.5152 6.2469 7.0236 6.7101 7.4987 7.1390 7.9427 7.5361 8.3577 7.9038 8.74558.2442 9.1079 8.5595 9.4466 8.8514 9.7632 9.1216 10.0591 9.3719 10.3356 9.6036 10.5940 9.8181 11.6536 10.6748 12.4090 11.2578 12.9477 11.6546 13.3317 11.9246 0.9174 0.9091 0.89290.8696 1.7591 1.7355 1.6901 1.6257 2.53132.4869 2.4018 2.2832 3.2397 3.1699 3.0373 2.8550 3.8897 3.7908 3.6048 3.3522 4.48594.3553 4.1114 3.7845 5.0330 4.8684 4.5638 4.1604 5.5348 5.3349 4.9676 4.4873 5.9952 5.7590 5.3282 4.7716 6.4177 6.1446 6.1 5.6502 5.0188 6.8052 6.4951 5.9377 5.2337 7.1607 6.8137 6.1944 5.4206 7.48697.1034 6.4235 5.5831 7.78627.3667 6.6282 5.7245 8.06077.6061 6.8109 5.8474 8.3126 7.82376.9740 5.9542 8.5436 8.0216 7.1196 6.0472 8.7556 8.2014 7.2497 6.1280 8.9501 8.36497.3658 6.1982 9.1285 8.5136 7.4694 6.2593 9.82269.0770 7.8431 6.4641 10.27379.42698.0552 6.5660 10.5668 9.6442 8.1755 6.6166 10.75749.77918.2438 6.6418 *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%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 X 6.4177). f=[(1 + i)" 1yi Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 600 VOUWN 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0100 2.02002.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.98476.1051 6.1520 6.3081 6.4684 6.6330 6.80196.9753 7.1533 7.3359 7.5233 7.7156 7.21357.4343 7.6625 7.89838.1420 8.3938 8.6540 8.9228 9.2004 9.4872 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 9.3685 9.7546 10.1591 10.5828 11.0266 11.491311.9780 12.4876 13.0210 13.5795 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 17.5603 18.5312 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 13.8093 14.6803 15.6178 16.6268 17.7130 18.882120.1406 21.4953 22.9534 24.5227 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 16.0969 17.2934 18.598920.0236 21.5786 23.2760 25.129027.1521 29.360931.7725 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 18.4304 20.0121 21.7616 23.6975 25.8404 28.2129 30.840233.7502 36.9737 40.5447 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.450241.3013 45.5992 20.8109 22.8406 25.116927.6712 30.5390 33.7600 37.379041.4463 46.0185 51.1591 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 28.2432 32.0303 36.459341.6459 47.7271 54.8645 63.2490 73.1059 84.700998.3471 34.7849 40.5681 47.5754 56.084966.4388 79.0582 94.4608 113.2832 136.3075 164.4940 41.6603 49.9945 60.4621 73.6522 90.3203 111.4348 138.2369172.3168 215.7108 271.0244 48.8864 60.4020 75.401395.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 1.0000 2.1200 3.3744 4.7793 6.3528 8.1152 10.0890 12.2997 14.7757 17.5487 20.6546 24.1331 28.0291 32.3926 37.2797 42.7533 48.8837 55.7497 63.4397 72.0524 133.3339 241.3327 431.6635 767.0914 1.0000 2.1500 3.4725 4.9934 6.7424 8.7537 11.0668 13.7268 16.7858 20.3037 24.3493 29.0017 34.3519 40.5047 47.5804 55.7175 65.0751 7 5.8364 88.2118 102.4436 212.7930 434.7451 881.1702 1,779.0903 16 18 20 40 Used to calculate the future value of a series of equal payments made at the end of each period. For example: What is the future value of $4,000 per year for 6 years assuming an annual interest rate of 8%. For (n=6,i=8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to $29,343.60 ($4,000 X 7.3359)