Grenada Company is contemplating the acquisition of a machine that costs $65,000 and promises to reduce annual cash operating costs by $13,000 over each of the next 6 years.

PV of $1 (i = 12%; n = 6):0.507PV of a series of $1 cash flows (i = 12%, n = 6):4.111

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

Multiple Choice

• $65,000 0.893 versus $13,000 4.111.
• $65,000 versus $13,000 4.111.
• $65,000 versus $78,000 4.111.
• $65,000 versus $13,000 6.
• $65,000 versus $78,000 0.507.