The Management of Trylon Farms Is Considering the Purchase of Equipment

question 37

Multiple Choice

The management of Trylon Farms is considering the purchase of equipment costing $320,000.The equipment has a useful life of eight years,with $20,000 residual value.The use of this equipment will produce positive annual cash flow of $60,000 for eight years,as well as $20,000 from sale of the equipment at the end of the eighth year.Compute the net present value of this investment,discounted at an annual rate of 10%.(Present value of $1 due in eight years,discounted at 10%,is 0.467;present value of $1 received annually for eight years,discounted at 10% is 5.335. )

• A)$9,340
• B)$320,100
• C)$9,440
• D)$329,440

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Definitions:

Client Data

Information collected and maintained about clients, used for managing client relationships, understanding client needs, and providing services.

Auditor Software

Auditor software is a type of computer program designed to help auditors inspect accounts and financial statements to ensure accuracy and compliance.

Rudimentary Services

Basic services that are foundational or elementary in the provision of more complex services or functions.

Cold Site

A backup site for IT operations that is equipped with infrastructure but does not have active systems or data, ready to be used in case of a disaster.