Farragut Company Is Evaluating an Opportunity to Invest $45,000 in New

Multiple Choice

Farragut Company is evaluating an opportunity to invest $45,000 in new manufacturing equipment. It will have a useful life of 3 years, and will generate $20,000 cash flows at the end of Year 1, $30,000 of cash flows at the end of Year 2, and $10,000 of cash flows at the end of Year 3. If Farragut uses a discount rate of 5%, what is the NPV of the project?
$$\begin{array} { | r | r | r | r | r | r | r | } \hline \text { Preant Value of } & & & & & & \\\$1\\\hline &5\%&6\%&7\%&8\%&9\%&10\%\\\hline 1 & 0.952 & 0.943 & 0.935 & 0.926 & 0.917 & 0.909 \\\hline 2 & 0.907 & 0.890 & 0.873 & 0.857 & 0.842 & 0.826 \\\hline 3 & 0.864 & 0.840 & 0.816 & 0.794 & 0.772 & 0.751 \\\hline 4 & 0.823 & 0.79 & 0.763 & 0.735 & 0.708 & 0.683 \\\hline 5 & 0.784 & 0.747 & 0.713 & 0.681 & 0.650 & 0.621 \\\hline 6 & 0.746 & 0.705 & 0.666 & 0.630 & 0.596 & 0.564 \\\hline 7 & 0.711 & 0.665 & 0.623 & 0.583 & 0.547 & 0.513 \\\hline 8 & 0.677 & 0.627 & 0.582 & 0.540 & 0.502 & 0.467 \\\hline 9 & 0.645 & 0.592 & 0.544 & 0.500 & 0.460 & 0.424 \\\hline 10 & 0.614 & 0.558 & 0.508 & 0.463 & 0.422 & 0.386 \\\hline\end{array}$$

A) $944 negative
B) $1,008 positive
C) $4,100 positive
D) $9,890 positive