Butler Corporation Is Considering the Purchase of New Equipment Costing

question 42

Multiple Choice

Butler Corporation is considering the purchase of new equipment costing $30,000.The projected annual after-tax net income from the equipment is $1,200,after deducting $10,000 for depreciation.The revenue is to be received at the end of each year.The machine has a useful life of 3 years and no salvage value.Butler requires a 12% return on its investments.The present value of an annuity of 1 for different periods follows: What is the net present value of the machine?

• A)$24,018.
• B)$(3,100).
• C)$30,000.
• D)$26,900.
• E)$(29,520).

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Definitions:

Commercial Usage

The habitual practices and norms that are recognized and enforced among businesses in specific industries.

Deemed To Have Accepted

Considered to have agreed to or acknowledged something, typically by failing to object within a certain period.

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Ex-Ship

A term used in international trade that specifies the seller's obligation to deliver goods to a designated port of arrival, with risk transferring to the buyer once off-loaded.