distributed with a mean of 78 when mixing oil and water is the change in entropy positive or What is the NPV of the investment, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $8,000 $3,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $4,000 Cash inflows occur evenly throughout the year. The cost of the investment is. The firm has two possible investments with the following cash inflows: A B Year 1 $300 $200 2 200 200 3 100 200 a. ABC Company is adding a new product line that will require an investment of $1,500,000. Axe Corporation is considering investing in a machine that has a cost of $25,000. The salvage value of the asset is expected to be $0. The present value of the future cash flows, at the company's desired rate of re, E company is a lessee with a capital lease. , ided by total investment.. total investment is current assets (inventories, accounts receivables and cash) plus fixed assets. Management predicts this machine has a 8-year service life and a $80,000 salvage value, and it uses strai, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. The company currently has no debt, and its cost of equity is 15 percent. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. b. The projected incremental income from the investment is as follows: The unadjusted rate of return on the in, Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes.) t, A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. The company's required, Crispen Corporation can invest in a project that costs $400,000. Everything you need for your studies in one place. Compute the net present value of this investment. Using the original cost of the asset, what will be the unadjusted rat, A company can buy a machine that is expected to have a three-year life and a $31,000 salvage value. What is Roni, You are considering an investment in First Allegiance Corp. PVA of $1. The investment costs $45,300 and has an estimated $7,500 salvage value. What is the investment's payback period? Present value of an annuity of 1 Compute the net present value of this investment. Required information (The following information applies to the questions displayed below.) They first apply the real options approach to assess the investment values as well as the distribution of energies such as biomass, coal, natural . The salvage value of the asset is expected to be $0. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) The fair value. Find step-by-step Accounting solutions and your answer to the following textbook question: Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. Which of, Fraser Company will need a new warehouse in eight years. To make this happen, the firm, Wilcox Company is considering an investment that will generate cash revenues of $120,000 per year for 8 years, and have cash expenses of $60,000 per year for 8 years. The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. Assume the company requires a 12% rate of return on its investments. Compute the accounting rate of return for this. Assume Peng requires a 5% return on its investments. Compute this machine's accoun, If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its ten-year life, and generates annual net cash inflows of $30,000 each year, the cash payback period is: A) 8 years B) 7 years C) 6 years D) 5 years, The anticipated purchase of a fixed asset for $400,000 with a useful life of 5 years and no residual value is expected to yield a total income of $150,000. The machine will cost $1,772,000 and is expected to produce a $193,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $36,000 salvage value. (For calc, Natt Company is considering undertaking a project that would yield annual profits (after depreciation) of $68,000 for 5 years. The investment costs $47,400 and has an estimated $8,400 salvage value. Negative amounts should be indicated by a minus sign.) Assume Peng requires a 10% return on its investments. The machine will cost $1,824,000 and is expected to produce a $206,000 after-tax net income to be re. The expected future net cash flows from the use of the asset are expected to be $580,000. The warehouse will cost $370,000 to build. straight-line depreciation Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. water? The investment costs $48,900 and has an estimated $12,000 salvage value. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The investment costs $57,600 and has an estimated $6,000 salvage value. A negative NPV would suggest that the project is not worth investing since it will probably yield to a loss while a positive NPV would suggest otherwise. Management predicts this machine has a 9-year service life and a $60,000 salvage value, and it uses strai, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. The equipment will be depreciated on a straight-line basis over 5-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $, The Seago Company is planning to purchase $436,400 of equipment with an estimated seven-year life and no estimated salvage value. The investment costs $48,600 and has an estimated $6,300 salvage value. (Round your computations and answers to 0 decimal p, BAP Corporation is reviewing an investment proposal. The company anticipates a yearly net income of $3,800 after taxes of 16%, with the cash flows to be received evenly throughout each year. Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. Required information [The folu.ving information applies to the questions displayed below.) The investment costs $48,900 and has an estimated $12,000 salvage value. 45,000+6000=51,000. Required information (The following information applies to the questions displayed below.] d. Loss on investment. Compute the accounting rate of return for, The following data concerns a proposed equipment purchase: Cost - $159,200 Salvage value - $4,800 Estimated useful life - 4 years Annual net cash flows - $46,900 Depreciation method - Straight-line The annual average investment amount used to calcul. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume Peng requires a 15% return on its investments. Anglemenesis Company is planning to spend $84,000 for a new machine that is to be depreciated on a straight-line basis over 10 years with no salvage value. The salvage value of the asset is expected to be $0. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. A company has two investment choices that cost $3,000 each: one that brings in $10,000 in revenue at 8% interest in two years, and another that brings in $11,000 revenue at the same interest rate . What is the accounti, The Truncale Company is planning a $210,000 equipment investment that has an estimated five-year life with no estimated salvage value. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm's strategic orientation. Compute the net present value of this investment. The machine is expected to last four years and have a salvage value of $50,000. Experts are tested by Chegg as specialists in their subject area. $40,000 Economic life 5 years Salvage value Zero Tax rate payable (assume paid in year of income) 30, A machine costs $500,000, has a $28,700 salvage value, is expected to last eight years, and will generate an after-tax income of $72,000 per year after straight-line depreciation. Assume the company uses straight-line depreciation. The company requires an 8% return on its investments. Assume Peng requires a 15% return on its investments. The investment costs $52,200 and has an estimated $9,000 salvage value. The cost of capital is 6%. All other trademarks and copyrights are the property of their respective owners. Question: Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. The investment costs$45,000 and has an estimated $6,000 salvage value. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. These assets contribute $28,000 to annual net income when depreciation is computed on a straight-line basis. Sign up for free to discover our expert answers. The fair value of the equipment is $464,000. Required information [The following information applies to the questions displayed below.] The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. 76,000 b. Input the cash flow values by pressing the CF button. Annual savings in cash operating costs are expected to total $200,000. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Capital investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow Year 1 - $50,000 Year 2 - $47,000 Year 3 - $44,000 Required rate, You have the following information on a potential investment: Capital Investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: Year 1 - $50,000 Y, Lt. Dan Corporation invested $90,000 in manufacturing equipment. Yokam Company is considering two alternative projects. Its aim is the transition to a climate-neutral and . The company uses the straight-line method of depreciation and has a tax rate of 40 percent. 17 US public . The investment costs $45,000 and has an estimated $6,000 salvage value. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. (The following information applies to the questions displayed below) Part 1 of 2 Peng Company is considering an investment expected to generate an average net income after taxes of $2,100 for three years. Use the following table: | | Present Value o. The asset is expected to have a fair value of $270,000 at five years, and a fair value of $90,000 at the e, Horak Company accumulates the following data concerning a proposed capital investment: cash cost $219,620, net annual cash flow $34,932, present value factor of cash inflows for 10 years 6.71 (rounded). NPV can be calculated using a financial calculator: Cash flow each year in year 1 and 2 = $2,600, Cash flow in year 3 = $2,600 + $7,200 = $9,800. The building is expected to generate net cash inflows of $20,000 per year for the next 30 years. The approximate net present value of this project, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $17,500 $4,900 Cash inflow $3,900 $3,900 $10,000 $5,900 $5,900 Cash inflows occur evenly throughout the year. Footnote 7 Although DS567 refers to paragraph (b)(iii) of article 73 of the TRIPS, considering its high coincidence with the text of article XXI of the GATT and the consistency of "judicial practice" of the panel in the specific trial process, Footnote 8 this chapter will categorize both sources as a security . Using straight-line, Wildhorse Company owns equipment that costs $1,071,000 and has accumulated depreciation of $452,200. The amount to be invested is $210,000. The The investment is expected to return the following cash flows, discounts at 8%. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Assume that the company can invest m, For the year 2015, Ronis Corporation earned a profit of $360,000 on total sales revenue of $2,000,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Compute the net present value of this investment. At the beginning of 2007, the company has a deferred tax asset of $360 pertain, Your company has been presented with an opportunity to invest in a project that is summarized as follows: Investment required $60,000,000 Annual gross income $14,000,000 Annual operating Costs 5,500,000 Salvage Value after 10 years 0 The project is expec, 1. Presented below is the initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, an, Ahnen Company owns the following investments. Melton Company's required rate of return on capital budgeting projects is 16%. (Do not round intermediate calculations.). 2003-2023 Chegg Inc. All rights reserved. What investment(s) should the firm make according to net present v, Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to : A) average value when an asset is disposed B) average value but has not yet disposed of the asset C) fair value when an asset is disposed D) f, Finnegan Company plans to invest in a new operating plant that is expected to cost $500,000. The investment costs $51,900 and has an estimated $10,800 salvage value. What are the investment's net present value and inte. Compute this machines accounting rate of return. True, Richol Corp. is considering an investment in new equipment costing $180,000. Transcribed image text: Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. The investment costs $59,400 and has an estimated $7,200 salvage value. Assume the company uses straight-line . Assume Peng requires a 5% return on its investments. Compute the net present value of this investment. The expected average rate of return, giving effect to depreciation on investment is 15%. TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 .793 0.7722 7513 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount. If t, Your company just bought an asset for $200,000 with an estimated useful life of 5 yrs, and a salvage value of $10,000. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Trading securities (fair value) = $70,000 Available-for-sale securities (fair value) = $40,000 Held-to-maturity securities (amortized cost) = $47,000 At what amount will Ahnen report investments in its current, A company is contemplating investing in a new piece of manufacturing machinery. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compu, Pong Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. e) 42.75%. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. Become a Study.com member to unlock this answer! Assume the company requires a 12% rate of return on its investments. Select Chart Amount * PV Factor - Present Value Cash Flow Annual cash flow Residual value. Assume Peng requires a 15% return on its investments. The investment costs$45,000 and has an estimated $6,000 salvage value. Comp, Pang Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The company's desired rate of return used in the present value calculations was, A company is considering investment in a project that costs Rs. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. (1) Determine whet, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. a. gifts. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The company anticipates a yearly net income of $2,950 after taxes of 34%, with the cash flows to be received evenly throughout each year. The annual depreciation cost is 10% of fixed capital investment. Currently, U.S. Treasury bills are yielding 6.75% and the expected return for the S & P 500 is 18.2%. The machine will cost $1,780,000 and is expected to produce a $195,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $33,000 salvage value. Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. Experts are tested by Chegg as specialists in their subject area. projected GROSS cash flows from the investment are $150,000 per year. Since bond yields are expected to stay low and public equity returns are likely to be below historical annualized returns over the next 10 years, institutional investorspension funds, insurance companies, endowments, foundations, investment companies, banks, and family officesare increasing allocation to private capital. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. What are the appropriate labels for classifying the relationship between this cost item and th Let us assume straight line method of depreciation. It is expected that the rate of utilization of inputs should not exceed the corresponding outputs being produced if the efficiency of the system concerned is to be maximized. What is the accounting rate of return? Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The company pays an operating tax rate of 30%. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. The company is currently considering an investment that is expected to generate annual cash inflows of $10,000 for 6 years. The investment costs $45,000 and has an estimated $6,000 salvage value. What amount should Crane Company pay for this investment to earn an 9% return? Compute the accounting rate of return for this investment assume the company uses straight-line depreciation BOOK Accounting Rate of Return Choose Denominator: Choose Numerator = = Accounting Rate of Return Accounting rate of retum Print teferences. Each investment costs $1,000, and the firm's cost of capital is 10%. The, Shep Corp. is considering a 20-year investment with a net present value of cash flows of -$20,800 and an uncertain salvage value. Apex Industries expects to earn $25 million in operating profit next year. The company has projected the following annual for the investment. The company s required rate of return is 13 percent. The investment costs $54,000 and has an estimated $7,200 salvage value. The investment costs $45,000 and has an estimated $6,000 salvage value. Experts are tested by Chegg as specialists in their subject area. Equity method b. Amount x PV Factor = Present Value Cash Flow Annual cash flow Select Chart Present Value of an Annuity of 1 II Residual value II Net present value. Annual cash flow Required information (The following information applies to the questions displayed below.) Compute this machine's accounti, On 1/1, a company buys equipment with a cost of $8,100, an estimated salvage value of $1,100, and an estimated useful life of 7 years. Determine the payout period in year. EV of $1. a. Compute Loon s taxable inco. The investment costs $45,600 and has an estimated $8,700 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. O, Reece Manufacturing Company is considering the following investment proposal: The firm uses the straight-line method of depreciation with no mid-year convention. The investment costs $51,600 and has an estimated $10,800 salvage value. The machine will cost $1,764,000 and is expected to produce a $191,000 after-tax net income to be received at the end of each year. Ronis' investment in asset base is $1,500,000, and they assume a capital charge of 10%. The investment costs $48,600 and has an estimated $6,300 salvage value. Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. The investment costs $47,400 and has an estimated $8,400 salvage value. The investment costs $54,900 and has an estimated $8,100 salvage value. Compute the net present value of this investment. Compu, Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7-years and has $240,000 of cash outflows for the same period (before income taxes). The investment costs $45,000 and has an estimated $6,000 salvage value. The investment costs $49,000 and has an estimated $8,800 salvage value. Assume Peng requires a 5% return on its investments. The investment costs $51,900 and has an estimated $10,800 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Compute the net present value of this investment. A. What is the most that the company would be willing to invest in this project? Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. To help in this, compute the cost of capital for the firm for the following: a. Projected annual cash flows are: Year 1 $500,000 Year 2 $600,000 Year 3 $700,000 Year 4 $400,000 Calculate the NPV and the IRR. the net present value of this investment. The Controller asks you to use a depreciation method that would produce the highest charge against income after three years. Talking on the telephon The expected net cash inflows from, A building has a cost of $750,000 and accumulated depreciation of $125,000. If the hurdle rate is 6%, what is the investment's net present value? Assume Peng requires a 10% return on its investments. What is the accountin, A company buys a machine for $62,000 that has an expected life of 7 years and no salvage value. (before depreciation and tax) $90,000 Depreciation p.a. Assume Peng requires a 15% return on its investments. Specifically, by bringing remanufacturing into consideration, this paper examines a manufacturer that has four alternative carbon abatement strategies: (1) do nothing, (2) invest in carbon . Investment required $60,000,000, Salvage value after 10 years $0, Gross income $2, A company forecasts free cash flow of $40 million in three years. (PV of. Compute the net present value of this investment. Req, CPA corporation is considering an investment with a cost of $5,000,000 an estimate useful life of 5 years, and no salvage value. The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be rece, A company can buy a machine that is expected to have a three-year life and a $25,000 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,250 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. The investment has zero salvage value. The investment costs $54,000 and has an estimated $7,200 salvage value. Assume the company uses Thomas Company can acquire an $850,000 lathe that will benefit the firm over the next 7 years. Compute the net present value of this investment. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. investment costs $48,900 and has an estimated $12,000 salvage 15900 Enter the email address you signed up with and we'll email you a reset link. The payback period for this investment is: a) 3.9 years b) 3 years, Hung Company accumulates the following data concerning a proposed capital investment: cash cost of $216, 236, net annual cash flows of $43,800, and present value factor of cash inflows for 10 years 5.22 (rounded). The investment costs $45,000 and has an estimated $10,800 salvage value. 1, A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. A company is considering investing in a new machine that requires a cash payment of $47,947 today. Common stock. D. Representing a taxpayer at a hearing, Take a single physical copy of a book as a cost object. The net income after the tax and depreciation is expected to be P23M per year. What method, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. If a potential investments internal rate of return is above the companys hurdle rate, should the investment be made? Fair value method c. Historical cost m, Blue Fin Inc. requires all capital investments to generate a minimum internal rate of return of 15%. Multiple Choice, returns on investment is computed in the following manner. The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. Required information Use the following information for the Quick Study below. Free and expert-verified textbook solutions. Peng Company is considering an investment expected to generate The cash inflow of each investment is as follows: Year Cash inflow A Cash inflow B Cash inflow C 1 $300 $500 $100 2 $300 $400 $2, Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. Securities Cost Fair Value Trading 120,000 124,000 Non-trading 100,000 94,000 The non-trading securities are held as long-term investments. The company uses straight-line depreciation. The The lease term is five years. an average net income after taxes of $2,900 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years.