Present value of $1

Periods	4%		6%		8%		10%		12%		14%
1	0.962		0.943		0.926		0.909		0.893		0.877
2	0.925		0.890		0.857		0.826		0.797		0.769
3	0.889		0.840		0.794		0.751		0.712		0.675
4	0.855		0.792		0.735		0.683		0.636		0.592
5	0.822		0.747		0.681		0.621		0.567		0.519
6	0.790		0.705		0.630		0.564		0.507		0.456
7	0.760		0.665		0.583		0.513		0.452		0.400
8	0.731		0.627		0.540		0.467		0.404		0.351
9	0.703		0.592		0.500		0.424		0.361		0.308
10	0.676		0.558		0.463		0.386		0.322		0.270

Present value of an Annuity of $1

Periods	4%		6%		8%		10%		12%		14%
1	0.962		0.943		0.926		0.909		0.893		0.877
2	1.886		1.833		1.783		1.736		1.690		1.647
3	2.775		2.673		2.577		2.487		2.402		2.322
4	3.630		3.465		3.312		3.170		3.037		2.914
5	4.452		4.212		3.993		3.791		3.605		3.433
6	5.242		4.917		4.623		4.355		4.111		3.889
7	6.002		5.582		5.206		4.868		4.564		4.288
8	6.733		6.210		5.747		5.335		4.968		4.639
9	7.435		6.802		6.247		5.759		5.328		4.946
10	8.111		7.360		6.710		6.145		5.650		5.216

Roman Knoze is considering two investments. Each will cost $20,000 initially. Project 1 will return annual cash flows of $10,000 in each of three years. Project 2 will return $5,000 in year 1, $10,000 in year 2, and $15,000 in year 3. Roman requires a minimum rate of return of 10%. What is the net present value of Project 2?

a.$24,070

b.$2,530

c.$5,670

d.$4,070

e.$20,000