Daniels Corporation Is Considering the Purchase of New Equipment Costing $$\begin{array} { l r } \text { Periods } & \text { 12 Percent } \\1 & 0.8929 \\2 & 0.7972 \\3 & 0.7118 \\4 & 0.6355\end{array}$$

question 70

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 3 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:
$$\begin{array} { l r } \text { Periods } & \text { 12 Percent } \\1 & 0.8929 \\2 & 0.7972 \\3 & 0.7118 \\4 & 0.6355\end{array}$$
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:

Alveolus

A tiny air sac in the lungs where the exchange of oxygen and carbon dioxide occurs.

Diaphragm

A large, dome-shaped muscle located at the base of the lungs and chest that plays a crucial role in breathing.

Bronchiole

Small airways in the lungs that lead from the bronchi to the alveoli, facilitating the movement of air in and out of the lungs.

Sheep Pluck

A dissected specimen consisting of the heart, lungs, and liver of a sheep, often used in biology studies.