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What the amount of the initial investment was

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Question 1: Cullumber Co. purchased some equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(700). Annual cost savings were: $5000 for year 1; 3000 for year 2; and $1000 for year 3. The amount of the initial investment was

                                      Present Value                   PV of an Annuity

Year of 1                     at 12% of 1                      at 12%

1                                     0.893                           0.893

2                                         0.797                      1.690

3                                        0.712                      2.402

Option 1: $6506.

Option 2: $8268.

Option 3: $7906.

Option 4: $6868.

Reference no: EM132540802

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