Fergus Company Is Considering the Purchase of a Machine That

question 163

Multiple Choice

Fergus Company is considering the purchase of a machine that will save the company $4,000 per year in operating costs for a period of seven years.The most it should pay for the machine is equal to

• A)$4,000 times the present value of an ordinary annuity for 7 periods.
• B)$28,000.
• C)$4,000 divided by the future value of a single sum at the end of 7 periods.
• D)$4,000 times the future value of an ordinary annuity for 7 periods.

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