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 net present value of the investment in high efficiency equipment is:

Multiple Choice

$(17,022).

$(37,299).

$(39,654).

$(56,676).