Question
The following data pertain to an investment proposal (Ignore income taxes.): Cost of the investment $ 62,000 Annual cost savings $ 18,000 Estimated salvage value
The following data pertain to an investment proposal (Ignore income taxes.):
| Cost of the investment | $ 62,000 | |
|---|---|---|
| Annual cost savings | $ 18,000 | |
| Estimated salvage value | $ 6,000 | |
| Life of the project | 5 | years |
| Discount rate | 12% |
Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the proposed investment is closest to:
Note: Round your intermediate calculations and final answer to the nearest whole dollar amount.
Multiple Choice
(a) $38,000
(b) $3,402
(c ) $2,890
(d) $6,292
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Financial Accounting An Introduction to Concepts, Methods and Uses
Authors: Roman L. Weil, Katherine Schipper, Jennifer Francis
14th edition
978-1111823450, 1-133-36617-1 , 1111823456, 978-1-133-3661, 978-1133591023
