Big League Products is considering replacing old production equipment with new high efficiency equipment. The new equipment will have a five-year life and Big Leagues cost of capital is 12%. Relevant cash flows and present value factors for 5 years @ 12% are as follows:

Investment in high efficiency equipment = $300,000. Monthly net cash savings from new high efficiency equipment = $5,625. Salvage value of new computer technology = 10% of the investment cost. Present value of $1 = 0.5674 Present value of an annuity of $1 = 3.6048

The total present value of the cash flows from the investment is:

$17,022.

$243,324.

$37,299.

$260,346.