Question
Butler Corporation is considering the purchase of new equipment costing $54,000. The projected annual after-tax net income from the equipment is $2,000, after deducting $18,000
Butler Corporation is considering the purchase of new equipment costing $54,000. The projected annual after-tax net income from the equipment is $2,000, after deducting $18,000 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% 1 0.9174 2 1.7591 3 2.5313 4 3.2397 What is the net present value of the machine? Multiple Choice $6,000. $45,563. $54,000. Incorrect $(3,374). $50,626.
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