Question

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 12% return from its investments. Investment Al $ (200,000) Initial investment Expected net cash flows in year: 100,000 90,000 95,000 لیا QS 24-11 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 12% Present Value Year 1 Year 2 Year 3 Totals Amount invested Net present value $ 0 $ 0 $ 0

Answer 1

Answer- Net present value of investment =$28659.

Explanation-

Calculation of Investment's Net Present Value
	Net Cash Flows $ (a)	Present Value of 1 at 12% (b)	Present Value of cash flows (c=a*b) $
Year 1	100000	0.8929	89290
Year 2	90000	0.7972	71748
Year 3	95000	0.7118	67621
Totals
Total present value of cash inflow (a)			228659
Total cash outflow (b)	200000	1	200000
Net Present Value $ (c=a-b)			28659

Answer- Net present value of investment =$42895.

Explanation-

Calculation of Investment's Net Present Value
	Net Cash Flows $ (a)	Present Value of 1 at 12% (b)	Present Value of cash flows (c=a*b) $
Year 1	100000	0.8929	89290
Year 2	90000	0.7972	71748
Year 3	95000	0.7118	67621
Salvage value	20000	0.7118	14236
Totals
Total present value of cash inflow (a)			242895
Total cash outflow (b)	200000	1	200000
Net Present Value $ (c=a-b)			42895

Answer-1-a)-The present value of this investment =$26135.20

Explanation-

Calculation of Net Present value of investment:-
Chart values are based on:
n= 35 years
I =8%
Select Chart	Amount	PV Factor	Present value
			$
Cash inflows	13000	11.6546	151509.80
Cash outflow	125374.6	1	125374.60
Net present value			26135.20