Present value of the total cost saving

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A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by $2,000 in the first year, $2,500 in the second year, and $3,000 in the third year, and $3,000 in the fourth year. These cost savings will be realized at the end of each year. The tractor costs $9,000 today. If the interest rate is forecasted to be lower than 7%, what would happen to the present value of the total cost saving? A. increase B. decrease C. is not affected D. cannot be determined

What is the net present value of this investment?

Reference no: EM131000351

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