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Find the net present value of the investment

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Reference no: EM132480511

Question - A manager is considering the following investment:

Estimated capital investment $270,000

Estimated useful life 3 years

Estimated disposal value in 3 years $10,000

Estimated annual savings in cash operating $150,000

Minimum desired rate of return 12%

Present value of ordinary annuity, 3 periods at 12% 2.4018

Present value of one, 3 periods at 12% 0.7118

Assume straight-line depreciation is used. Ignore income taxes. The net present value of the investment is ________.

a. $50,310

b. $57,428

c. $90,270

d. $97,388

Reference no: EM132480511

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