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What is the lowest level of annual cash operating savings

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Reference no: EM132527289

Valesano Company is considering a project with the following information:

Cost: $4,000

Annual cash operating savings (end of year): $2,000

Terminal salvage: $0

Useful life in years: 3

Required rate of return: 10%

Present value of one for 3 periods at 10%: 0.7513

Present value of ordinary annuity of one for 3 periods at 10%: 2.4869

Question 1: Ignoring taxes, what is the lowest level of annual cash operating savings that will result in a positive net present value?

A) $1,550

B) $1,600

C) $1,608

D) $2,000

Reference no: EM132527289

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