Butler corporation is considering the purchase of new equipment costing $84,000. the projected annual after-tax net income from the equipment is $3,000, after deducting $28,000 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. butler requires a 9% return on its investments. the present value of an annuity of 1 for different periods follows:

periods 9 | percent
1 | 0.9174
2 | 1.7591
3 | 2.5313
4 | 3.2397

what is the net present value of the machine? (closest to)

- $5,529.70

Explanation:

The computation of the Net present value is shown below

= Present value of all yearly cash inflows after applying discount factor - initial investment

where,

The Initial investment is $84,000

And, the after tax net income would be

= Projected annual after-tax net income + depreciation expenses

= $3,000 + $28,000

= $31,000

Now the present value after applying the present value of an annuity for 3 years would be

= $31,000 ×  2.5313

= $78,470.3

Now put these values to the above formula  

So, the value would equal to

= $78,470.3 -  $84,000

= - $5,529.70

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

your welcome leave a rate and a < 3