Natchez, Inc

question 113

Multiple Choice

Natchez, Inc. is considering the purchase of a new machine costing $200,000. The company will incur $5,000 per year in operating expenses but it will allow the company to earn an additional $100,000 per year in revenues. Natchez expects the machine to provide future benefits for 3 years and salvage value at the end of the 3-year period to be $10,000. The company uses straight-line depreciation method. The income tax rate is 30%. If the required rate of return is 10%, how much is the net present value of this project?

• A) $20,143
• B) $12,629
• C) $43,769
• D) None of these answer choices are correct.

---

Definitions:

Board Of Directors

The Board of Directors is a group of individuals elected to represent shareholders' interests and oversee the management and major decisions of an organization.

Organizational Charter

A formal document that outlines the mission, values, and structure of an organization.

Articles Of Incorporation

Legal documents filed with a state government to legally recognize a corporation as a business entity.

Case Consultation

A professional discussion or meeting focused on discussing and seeking solutions or advice for a particular client's case or situation.