(Ignore income taxes in this problem.) Sam Howell is thinking of investing $70,000 to start a bookstore. The business is expected to generate $15,000 in net cash flows for each of the next five years. At the end of the fifth year, Sam plans to sell the business for $110,000 cash. At a 12% discount rate, what is the net present value of the investment?

Present Value of Annuity of $1 Present Value of Annuity of $1

Period 12% Period 12%

1 .893 1 0.893

2 .797 2 1.690

3 .712 3 2.402

4 .636 4 3.037

5 .567 5 3.605

	$46,445.
	$54,075.
	$62,370.
	$70,000.