Peter Wants to Buy a Computer Which He Expects to Save

question 75

Multiple Choice

Peter wants to buy a computer which he expects to save him $4,000 each year in bookkeeping costs. The computer will last for five years, and at the end of five years it will have no salvage value. If Peter's required rate of return is 12%, what is the maximum price Peter should be willing to pay for the computer now?

• A)$20,000
• B)$14,420
• C)$11,340
• D)$10,830

---

Definitions:

Part-time Employees

Workers who are employed for fewer hours than the standard full-time workweek, often receiving prorated wages and benefits.

Full-time Employees

Individuals who work a full schedule, typically 35-40 hours per week, and are entitled to full employment benefits.

Modular Benefits Plan

A flexible employee benefits package that allows individuals to choose from a range of options to tailor coverage to their specific needs.

Core Benefits Plan

Essential benefits provided by an employer, including health insurance, retirement plans, and disability coverage.