AB Co. purchased equipment 3 years ago. The company's required rate of return is 12%, and...

 

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AB Co. purchased equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $12000 for year 1: $10000 for year 2; and $8000 for year 3. The amount of the initial investment was? Year 1 2 3 Present Value of 1 at 12% 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2.402 AB Co. purchased equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $12000 for year 1: $10000 for year 2; and $8000 for year 3. The amount of the initial investment was? Year 1 2 3 Present Value of 1 at 12% 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2.402

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To calculate the initial investment made by AB Co we need to determine the present value of the cost ... View the full answer