Grenada Company is contemplating the acquisition of a machine that costs $55,000 and promises to reduce annual cash operating costs by $10,000 over each of the next 7 years.

PV of $1 (i = 12%; n = 7):0.452PV of a series of $1 cash flows (i = 12%, n = 7):4.564

Which of the following is a proper way to evaluate this investment if the company desires a 12% return on all investments?

Multiple Choice

• $55,000 versus $10,000 4.564.
• $55,000 versus $70,000 4.564.
• $55,000 versus $70,000 0.452.
• $55,000 0.893 versus $10,000 4.564.
• $55,000 versus $10,000 7.