Benaflek Co A)$40956
B)$36632

Benaflek 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 $(1800) .Annual cost savings were: $20000 for year 1; $16000 for year 2; and $12000 for year 3.The amount of the initial investment was $\begin{array} { c c c } \underline{\text { Year }} & \begin{array} { c } \text { Present Value } \\\underline{\text { of } 1 \text { at } 12 \%}\end{array} & \begin{array} { c } \text { PV of an Annuity } \\\underline{\text { of } 1 \text { at } 12 \%}\end{array} \\ 1 & .893 & .893 \\2 & .797 & 1.690 \\3 & .712 & 2.402\end{array}$

A) $40956.
B) $36632.
C) $40232.
D) $37356.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free