To find the present value (PV) of the savings, we can use the formula for the present value of an annuity because the company will generate $63,000 per year for 7 years. The formula for the present value of an annuity is:

$PV = P \times \frac{1 - (1 + r)^{-n}}{r}$

Where:

• $P$ is the annual payment ($63,000)
• $r$ is the discount rate (7.50% or 0.075)
• $n$ is the number of years (7)

Now, we can calculate the present value.

$PV = 63,000 \times \frac{1 - (1 + 0.075)^{-7}}{0.075}$

Let's compute this.The present value of the annual savings of $63,000 over 7 years, with a discount rate of 7.50%, is approximately $333,685.88.

Do you want more details or have any questions?

Here are some related questions you might find interesting:

1. What if the discount rate was 5% instead of 7.50%?
2. How would the present value change if the revenue lasts for 10 years?
3. What is the difference between present value and future value?
4. How does changing the frequency of payments (e.g., quarterly instead of yearly) affect the present value?
5. How would inflation impact the calculation of the present value?

Tip: The higher the discount rate, the lower the present value of future cash flows.