Use the Information Below to Answer the Following Question(s)

question 12

Multiple Choice

Use the information below to answer the following question(s) .Saturn Ltd.wants to automate one of its production processes.The new equipment will cost $180,000.In addition, Saturn will incur installation and testing costs of $5,000 and $8,500 respectively.The expected life of the equipment is 8 years and the salvage value of the equipment is estimated at $18,000.The annual cash savings are estimated at $32,000.The company uses straight-line depreciation and has a required rate of return of 14%.Ignore income taxes.
-What is the net present value for the investment Saturn Ltd.is considering?

• A)$(45,056.36)
• B)$(31,556.36)
• C)$(25,246.29)
• D)$(38,746.29)
• E)$45,056.36

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Definitions:

Distribution Network

A system of warehouses, transport services, and distribution centers that facilitates the movement of products from manufacturers to consumers.

Manufacturer

A company or individual that produces finished goods from raw materials using various processes, tools, and machinery.

Economies Of Scale

The cost advantage achieved by an increase in production, leading to a lower cost per unit.

Facilities

Physical locations or infrastructures where business operations occur, including offices, factories, and warehouses.