Abigail's Tax Help, Is a Firm That Sells Advice to Taxpayers

Multiple Choice

Abigail's Tax Help, is a firm that sells advice to taxpayers. Abigail is considering buying a new computer that costs $1,500. She expects that the computer will generate an additional profit of $1,200 at the end of the first year and $500 at the end of the second year, after which it will be worthless. If the annual interest rate in the next two years is 5 percent, what is the present value of the profit from the computer?

A) $1,596
B) $1,500
C) $1,361
D) $1,654