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The following data pertain to an investment proposal (Ignore income taxes.): Cost of the investment $ 48,000 Annual cost savings $ 14,000 Estimated salvage value

The following data pertain to an investment proposal (Ignore income taxes.):

Cost of the investment $ 48,000
Annual cost savings $ 14,000
Estimated salvage value $ 4,000
Life of the project 5 years
Discount rate 10 %

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.

The net present value of the proposed investment is closest to:

Multiple Choice

  • $5,074

  • $2,484

  • $7,558

  • $30,000

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