Answer:
$2,434.50
Explanation:
The computation of the net present value is shown below:
Net present value = Present value for next three years - initial investment
where,
Present value for next three years is
= Annual payment × PVIFA factor for 10% for 3 years
= $5,000 × 2.4869
= $12,434.50
Refer to the PVIFA table
And, the initial investment is $10,000
So, the net present value is
= $12,434.50 - $10,000
= $2,434.50
