17. Cherry Company wants to purchase equipment with a 3-year useful life, which is expected to produce cash inflows of $15,000 each year for two years, and $9,000 in year 3. Cherry has a 14% cost of capital, and uses the following factors. What is the present value of these future cash flows? (Answer: $30,780)

Present Value of 1

Period 14%

1 .88

2 .77

3 .67

18. Metgers Inc. is considering purchasing equipment costing $12,000 with a 6-year useful life. The equipment will provide cost savings of $3,100 and will be depreciated straight-line over its useful life with no salvage value. Metgers requires a 10% rate of return.

Present Value of an Annuity of 1

Period 8% 9% 10% 11% 12% 15%

6 4.623 4.486 4.355 4.231 4.111 3.784

What is the approximate net present value of this investment? (Answer: $1,501)