116

Butler Corporation is considering the purchase of new equipment costing $87,000. The projected annual after-tax net income from the equipment is $3,100, after deducting $29,000 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 8% return on its investments. The present value of an annuity of $1 for different periods follows:

Periods	8%
1	0.9259
2	1.7833
3	2.5771
4	3.3121

What is the net present value of the machine?

Multiple Choice

• $82,725.

• $87,000.

• $9,300.

• $(4,275).

• $74,736.