Metlock Inc. is contemplating the purchase of an asset costing $48000 which will provide cost savings of $18000 in year 1, $22000 in year 2 and $23000 in year 3. The asset will have a salvage value of $5000. The companys required rate of return is 10%. The company uses straight-line depreciation.

Year	Present Value of 1 at 10%	PV of an Annuity of 1 at 10%
1	0.909	0.909
2	0.826	1.736
3	0.751	2.487

$622.

$12529.

$7562.

$9300.