A piece of equipment has a cost of $20,000. The equipment will provide cost savings of $3,500 each year for ten years, after which time it will have a salvage value of $2,500. If the company's discount rate is 12%, the equipment's net present value is?

A) $2,275.
B) $17,500.
C) ($225) .
D) $580.

The net present value (NPV) of the equipment can be calculated using the formula for NPV, which involves discounting the future cash flows (cost savings and salvage value) back to their present value and subtracting the initial investment. The calculation involves the cost savings of $3,500 per year for ten years and the salvage value of $2,500 at the end of ten years, all discounted at the company's discount rate of 12%. The initial investment is $20,000. The correct calculation results in an NPV of approximately $580, indicating that the investment would add this amount to the company's value.