Richman Co A)$20478
B)$18316

Richman Co.purchased some equipment 3 years ago.The company's required rate of return is 12% and the net present value of the project was $(900) .Annual cost savings were: $10000 for year 1; $8000 for year 2; and $6000 for year 3.The amount of the initial investment was $\begin{array} { c c c } \underline{\text { Year } }& \begin{array} { c } \text { Present Value } \\\underline{\text { of } 1 \text { at } 12 \%}\end{array} & \begin{array} { c } \text { PV of an Annuity } \\\underline{\text { of } 1 \text { at } 12 \%}\end{array} \\1& .893 &.893 \\ 3 & .797 & 1.690 \\3 & .712 & 2.402\end{array}$

A) $20478.
B) $18316.
C) $20116.
D) $18678.

Correct Answer:

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