Approximate net present value of investment


Cleaners, Inc. is considering purchasing equipment costing $30,000 with a six-year useful life. The equipment will provide cost savings of $7,300 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return. What is the approximate net present value of this investment?

a) $13,800

b) $1,794

c) $886

d) $2,748

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Accounting Basics: Approximate net present value of investment
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