The following data pertain to an investment proposal: Required investment $75,000 Annual cash savings $18,000 Projected life of investment 8 years Projected salvage value $4,000 Required rate of return 16% Ignoring income taxes, how much is the net present value of the proposed investment?

Using a financial calculator, input the following using CF function;

Initial Investment; CF0 = - 75,000

Yr1 cashflow; C01 = 18,000

Yr2 cashflow; C02 = 18,000

Yr3 cashflow; C03 = 18,000

Yr4 cashflow; C04 = 18,000

Yr5 cashflow; C05 = 18,000

Yr6 cashflow; C06 = 18,000

Yr7 cashflow; C07 = 18,000

Yr8 cashflow; C08 = 18,000 + 4,000 = 22,000

Required rate of return = 16%

then compute Net present value by keying in NPV, CPT = $4,404.74