Saget Company Is Considering the Purchase of Equipment That Would

question 12

Multiple Choice

Saget Company is considering the purchase of equipment that would cost $35,000 and offer annual cash inflows of $10,500 over its useful life of 5 years.Assuming a required rate of return of 8%,what is the net present value of this investment opportunity? (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

• A) $(6,923)
• B) $17,500
• C) $6,923
• D) $41,923

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Definitions:

AASB 12/IFRS 12

An accounting standard that requires disclosures of interests in other entities, including subsidiaries, joint arrangements, associates, and unconsolidated structured entities.

Disclosure Requirements

Specific information that must be provided in financial statements or notes to the statements, ensuring transparency and completeness in financial reporting.

Decision Making

The process of selecting the best course of action among several alternatives.

Capacity to Control

The power to direct the financial and operating policies of an entity so as to obtain benefits from its activities.