The WhiteCliffs Resort Accountant Has Developed the Following Estimates Relating

The WhiteCliffs Resort accountant has developed the following estimates relating to a proposed replacement of a boiler.
$$\begin{array} { l r } \text { Cost of new boiler } & \$ 60,000 \\\text { Annual cash savings from new equipment } & \$ 13,000 \\\text { Life of the new equipment } & 6 \text { years } \\\text { Equipment salvage value } & \$ 4,000 \\\text { WhiteCliffs Resort cost of capital } & 7 \%\end{array}$$ What is the net present value of the proposed investment?

A) $3,945
B) $4,635
C) $5,235
D) $6,144
E) $7,011

Correct Answer:

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