Daniels Corporation Is Considering the Purchase of New Equipment Costing

question 120

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 present value of an annuity of 1 for different periods follows: 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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