Daniels Corporation Is Considering the Purchase of New Equipment Costing

question 102

Multiple Choice

Daniels 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 three years and no salvage value.Daniels requires a 12% return on its investments.The factors for the present value of $1 for different periods follow:
$$\begin{array} { l r } \underline{\text { Periods }} & \underline{12 \text { Percent }} \\1 & 0.8929 \\2 & 0.7972 \\3 & 0.7118 \\4 & 0.6355\end{array}$$
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:

Sales Data Analysis

Sales Data Analysis is the process of examining sales figures to understand patterns, trends, and areas of improvement or opportunity for a business.

Behavioral Analysis

The study of individual actions and reactions, often within a specific context, to understand underlying mechanisms, motivations, and patterns of behavior.

Churn Levels

The rate at which customers stop doing business with an entity, often used in the context of subscription-based services.

Stopped Using

Refers to the cessation of utilizing a product, service, or process, often due to dissatisfaction, finding a better alternative, or other reasons.