Question: 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

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?

a. $59,600

b. $60,800

c. $62,900

d. $69,500

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