Pena Company is considering an investment of $27,215 that provides net cash flows of $8,400 annually for four years. (a) If Pena Company requires a 8% return on its investments, what is the net present value of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment?
Pena Company is considering an investment of $27,215 that provides net cash flows of $8,400 annually for four years. (a) If Pena Company requires a 8% return on its investments, what is the net present value of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Pena Company is considering an investment of $27,215 that provides net
(a) If Pena Company requires a 8%
(b) Based on net present value, should Pena Company make this investment?
Transcribed Image Text:Required A
Required B
What is the net present value of this investment?
Present Value of
Net Cash Flows
Net Cash Flows x
PV Factor
Years 1-4
$
Net present value
%24
Transcribed Image Text:Required A
Required B
Based on net present value, should Pena Company make this investment?
Based on net present value, should Pena Company make this investment?
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