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 $2,500 for three years. The investment costs $55,200 and has an estimated $11,100 salvage value QS 26-7 Computation of accounting rate of return LO P2 Compute the accounting rate of return for this investment assume the company uses straight line depreciation. Choose Numerator Accounting Rate of Return Choose Denominator: Accounting Rate of Return Accounting rate of return 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 $2,500 for three years. The investment costs $55,200 and has an estimated $11100 salvage value QS 26-8 Net present value LO P3 Assume Peng requires a 10% return on its investments Compute the net present value of this investment. Assume the company uses straight-line depreciation (py of $1. Fy of $1. PVA of $1. and FVAL 5.1) (Use appropriate foctor(s) from the tables provided. Negative amounts should be indicated by o minus sign. Round your present value foctor to 4 decimals.) Select Chart Amount PV Factor Present Value $ 0 Cash Flow Annual cash flow Residual valve 0 Net present value Following is information on an investment considered by Hudson Co. The investment nas zero salvage value ine company requires a 9% return from its investments Investment Al $(230,000) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 140,000 118,000 107,000 QS 26-11 Net present value LO P3 Compute this investment's net present value. (PV of $1. FV of $1. PVA of $1, and FVA of $1 (Use appropriate factor(s) from the provided. Round all present value factors to 4 decimal places.) Cash Flow Present Value of 1 at 9% Present Value Year 1 Year 2 Year 3 Totals Amount invested Net present value Investment A1 $(230,000) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 14 , 118,000 107,000 QS 26-12 Net present value, with salvage value LO P3 Assume that instead of a zero salvage value, as shown above, the investment has a salvage va investment's net present value. (PV of $1, FV of $1. PVA of $1. and FVA of $1) (Use appropriate Round all present value factors to 4 decimal places.) Cash Flow Present Value of 1 at 9% Present Value n Year 1 Year 2 Year 3 Totals Amount invested Net present value
