Butler Corporation is considering the purchase of new equipment costing $48,000. The projected annual after-tax net income from the equipment is $1,800, after deducting $16,000 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 11% return on its investments. The present value of an annuity of 1 for different periods follows:
Periods11 Percent
10.9009
21.7125
32.4437
43.1024
What is the net present value of the machine?
a. $(4,502).
b. $48,000.
c. $5,400.
d. $43,498.
e. $39,099.
Answers: 2
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Butler Corporation is considering the purchase of new equipment costing $48,000. The projected annua...
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