Para Co. is reviewing the following data relating to an energy saving investment proposal:

Cost P50,000 (nondepreciable)

Residual value at the end of 5 years 10,000

Present value of an annuity of 1 at 12% for 5 years 3.60

Present value of 1 due in 5 years at 12% 0.57

1.What would be the annual savings needed to make the investment realize a 12% yield assuming that Para will realize the residual value at the end of year 5?

2.What would be the annual savings needed to make the investment realize a 12% yield assuming that Para will realize the residual value at the end of year 5 (as a gain) and that the marginal tax rate is at 30%?

3.What would be the annual savings needed to make the investment realize a 12% yield assuming that Para will not realize the residual value at the end of year 5?