CullumberCo. purchased some equipment 3 years ago. The company's required rate of return is12%, and the net present value of the project was $(700). Annual cost savings were: $5000for year 1;3000for year 2; and $1000for year 3. The amount of the initial investment was

Present Value PV of an Annuity

Year of 1 at 12% of 1 at 12%

1 0.893 0.893

2 0.797 1.690

3 0.712 2.402

$6506.

$8268.

$7906.

$6868.