Question

Read Publishing is considering the purchase of a used printingpress costing $84,200. The printing press would generate a net cashinflow of $37,422 a year for 3 years. At the end of 3 years, thepress would have no salvage value. The company's cost of capital is10 percent. The company uses straight-line depreciation. Thepresent value factors of an annuity of $1.00 for different rates ofreturn are as follows:
Cost of Capital
Period 8% 10% 12% 14% 16%
2 1.78 1.74 1.69 1.65 1.61
3 2.58 2.49 2.40 2.32 2.25
4 3.31 3.17 3.04 2.91 2.80
The investment's net present value is:

		$ 5,480
		$19,200
		$76,800
		$ 8,981