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
C
Business
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