Pole Co. is investing in a machine with a three-year life. The machine is expected to reduce annual cash operating costs by $30,000 in each of the first two years and by $20,000 in year three. Present values of an annuity of $1 at 14% are
|
Period 1 |
0.88 |
|
2 |
1.65 |
|
3 |
2.32 |
Using a 14% cost of capital, what is the present value of these future savings?
- $59,600
- $60,800
- $62,900
- $69,500