Valesano Company is considering a project with the following information:

Project 1

Cost: $4,000

Annual cash operating savings (end of year): $2,000

Terminal salvage: $0

Useful life in years: 3

Required rate of return: 10%

Present value of one for 3 periods at 10%: 0.7513

Present value of ordinary annuity of one for 3 periods at 10%: 2.4869

Ignoring taxes, what is the lowest level of annual cash operating savings that will result in a positive net present value?

A) $1,550

B) $1,600

C) $1,608

D) $2,000

Valesano Company is considering a project with the following information: Project 1 Cost $4,000 Annual cash operating savings(end of year) $2,000 Terminal salvage $0 Useful life in years 3 Required rate of return 10% Present value of one for 3 periods at 10% 0.7513 Present value of ordinary annuity of one for 3 periods at 10% 2.4869 Ignoring taxes, what is the lowest level of annual cash operating savings that will result in a positive net present value? A) $1,608 B) $1,600 C) $2,000 D) $1,550