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Following is information on an investment considered by Hudson Co. The investment has zero salvage value....

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 A1
Initial investment $ (200,000 )
Expected net cash flows in:
Year 1 100,000
Year 2 90,000
Year 3 75,000

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 tables provided. Round all present value factors to 4 decimal places.)

Solutions

Expert Solution

Calculation of NPV 12%
Year Cashflow PV factor, 1/(1+r)^t PV-Board game
0 $       (200,000)     1.0000 $ (200,000.00)
1 $        100,000     0.8929 $     89,290.00
2 $          90,000     0.7972 $     71,748.00
3 $          75,000     0.7118 $     53,385.00
NPV $     14,423.00

ekkarill92 answered 2 years ago
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