Question

A salesperson from a computer company claims that their software, which costs $85,000 and has an estimated life of four years, will general annual savings for the city of Nashua of $32,000. If the discount rate is 10% the net present value of this software investment would be (see choices below present value tables):

Present Value of $1
Periods	4%	6%		8%	10%	12%	14%	16%	18%	20%
1	.962	.943		.926	.909	.893	.877	.862	.847	.833
2	.925	.890		.857	.826	.797	.769	.743	.718	.694
3	.889	.840		.794	.751	.712	.675	.641	.609	.579
4	.855	.792		.735	.683	.636	.592	.552	.516	.482
5	.822	.747		.681	.621	.567	.519	.476	.437	.402
6	.790	.705		.630	.564	.507	.456	.410	.370	.335
7	.760	.665		.583	.513	.452	.400	.354	.314	.279
8	.731	.627		.540	.467	.404	.351	.305	.266	.233
9	.703	.592		.500	.424	.361	.308	.263	.225	.194
10	.676	.558		.463	.386	.322	.270	.227	.191	.162
Present Value of a Series of $1 Cash Flows
Periods	4%		6%	8%	10%	12%	14%	16%	18%	20%
1	0.962		0.943	0.926	0.909	0.893	0.877	0.862	0.847	0.833
2	1.886		1.833	1.783	1.736	1.690	1.647	1.605	1.566	1.528
3	2.775		2.673	2.577	2.487	2.402	2.322	2.246	2.174	2.106
4	3.630		3.465	3.312	3.170	3.037	2.914	2.798	2.690	2.589
5	4.452		4.212	3.993	3.791	3.605	3.433	3.274	3.127	2.991
6	5.242		4.917	4.623	4.355	4.111	3.889	3.685	3.498	3.326
7	6.002		5.582	5.206	4.868	4.564	4.288	4.039	3.812	3.605
8	6.733		6.210	5.747	5.335	4.968	4.639	4.344	4.078	3.837
9	7.435		6.802	6.247	5.759	5.328	4.946	4.607	4.303	4.031
10	8.111		7.360	6.710	6.145	5.650	5.216	4.833	4.494	4.192

Group of answer choices:

A. $23,175

B. $101,440

C. $16,440

D. $63,512

Answer 1