Question

1.) Required information [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 3% return from its investments. Investment Al $(290,000) Initial investment Expected net cash flows in Year 1 125,000 140,000 109,000 Year 2 Year 3 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.) Present Value of 1 at 3% Cash Flow Present Value Year 1 Year 2 Year 3 Totals 0 S 0 Amount invested Net present value S 0 2.) If Quail Company invests $40,000 today, it can expect to receive $11,800 at the end of each year for the next seven years, plus an extra $6,100 at the end of the seventh year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Enter negative net present values, if any, as negative values. Round your present value factor to 4 decimals.) What is the net present value of this investment assuming a required 10% return on investments? Chart Values are Based on: n = % Cash Flow Select Chart Amount PV Factor Present Value Annual cash flow Additional cash flow Net present value 3.) Required information (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 3% return from its investments. Investment Al Initial investment Expected net cash flows in: Year 1 Year 2 $(290,000) 125,000 140,000 109,000 Year 3 Assume that instead of a zero salvage value, as shown above, the investment has a salvage value of $23,000. 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.) Present Value of 1 at 3% Cash Flow Present Value Year Year 2 Year 3 Totals Amount invested Net present value

Answer 1

1.

Year	Cash Flow	Present Value of 1 at 3%	Present Value
1	$   1,25,000	0.9709	$       1,21,363
2	$   1,40,000	0.9426	$       1,31,964
3	$   1,09,000	0.9151	$           99,746
Totals			$       3,53,072
Amount Invested			$      -2,90,000
Net Present Value			$           63,072

2.

	n =	7
	I =	10	%
Cash Flow	Amount	PV Factor	PV
Annual Cash Flow	$               11,800	4.8688	$       57,452
Additional Cash Flow	$                  6,100	0.5132	$         3,131
Total PV			$       60,582
Less Investment			$     -40,000
Net Present Value			$       20,582

3.

Year	Cash Flow	Present Value of 1 at 3%	Present Value
1	$   1,25,000	0.9709	$       1,21,363
2	$   1,40,000	0.9426	$       1,31,964
3	$   1,32,000	0.9151	$       1,20,793
Totals			$       3,74,120
Amount Invested			$      -2,90,000
Net Present Value			$           84,120

Salvage Value is added in Year 3 Cash Flows