Question

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 $3,100 for three years. The investment costs $51,900 and has an estimated $10,800 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.) Select Chart Amount x PV Factor = Present Value Cash Flow Annual cash flow Residual value Net present value

Answer 1

Here you go, NPV is $ 3180.07

Investment Cost	51,900
Salvage Value	10,800
Net	41,100
Depreciation	13,700

Cash Flow	Select Chart	Amount	x	PV Factor	=	Present Value ($)
Annual Cash Flow	Net Income plus Non-Cash Exp. (Depreciation)	16,800		2.72325	=	45,750.60
Residual Value		10,800		0.86384	=	9,329.47
	Total Present Value					55,080.07
	Initial Investment					51,900.00
	Net Present Value					3,180.07