Required information Use the following information for the Quick Study below. [The following information applies to the questions displayed below.) Project A requires a $425,000 initial investment for new machinery with a five-year life and a salvage value of $37,500. The company uses straight-line depreciation. Project A is expected to yield annual net income of $20,700 per year for the next five years. QS 25-5 Payback period LO P1 Compute Project A's payback period. Payback Period Choose Denominator: Choose Numerator: Payback Period = Payback period 0 ! Required information Use the following information for the Quick Study below. [The following information applies to the questions displayed below.] Project A requires a $425,000 initial investment for new machinery with a five-year life and a salvage value of $37,500. The company uses straight-line depreciation. Project A is expected to yield annual net income of $20,700 per year for the next five years. QS 25-6 Accounting rate of return LO P2 Compute Project A's accounting rate of return. Accounting Rate of Return Choose Denominator: Choose Numerator: 11 Accounting Rate of Return Accounting rate of return 0 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 $2,700 for three years. The investment costs $52,500 and has an estimated $7,200 salvage value. QS 25-8 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. (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.) Select Chart Amount X PV Factor = Present Value Cash Flow Annual cash flow Residual value Net present value ! Required information Use the following information for the Quick Study below. (The following information applies to the questions displayed below.) Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a 9% return from its investments. Investment A1 $(340,000) Initial investment Expected net cash flows in year: 1 2 3 105,000 130,000 105,000 QS 25-11 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 tables 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 ! Required information Use the following information for the Quick Study below. [The following information applies to the questions displayed below.] Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a 9% return from its investments. Investment A1 $(340,000) Initial investment Expected net cash flows in year: 1 2 3 WNH 105,000 130,000 105,000 QS 25-12 Net present value, with salvage value LO P3 Assume that instead of a zero salvage value, as shown above, the investment has a salvage value of $26,000. Compute the investment's net present value. (PV of $1. FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables 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
