Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a 6% return from its investments. Investment A1
Initial investment $ (300,000 )
Expected net cash flows in year:
1 110,000
2 106,000
3 87,000
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 6% Present Value
Year 1
Year 2
Year 3
Totals $0 $0
Amount invested
Net present value $0
Assume that instead of a zero salvage value, as shown above, the investment has a salvage value of $21,500. 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.)
Cash Flow Present Value of 1 at 6% Present Value
Year 1
Year 2
Year 3
Totals $0 $0
Amount invested
Net present value $0

Suppose you win a small lottery and have the choice of two ways to be paid: you can accept the money in a lump sum or in a series of payments over time. if you pick the lump sum, you get $2,950 today. if you pick payments over time, you get three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. 1) at an interest rate of 6% per year, the winner would be better off accepting the (lump sum / payments over time), since it has the greater present value. 2) at an interest rate of 9% per year, the winner would be better off accepting the (lump sum / payments over time), since it has the greater present value. 3) years after you win the lottery, a friend in another country calls to ask your advice. by wild coincidence, she has just won another lottery with the same payout schemes. she must make a quick decision about whether to collect her money under the lump sum or the payments over time. what is the best advice to give your friend? a) the lump sum is always better. b) the payments over time are always better. c) it will depend on the interest rate; advise her to get a calculator. d) none of these answers is good advice.