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)

B. $(3,100).

Explanation:

As we know Net Present value is calculated by discounting each years cash flows using using the required rate of return.

Cash Flow = Net Income + Depreciation = $1,200 + $10,000 = $11,200

Present value of the 3 years cash flow

Present value = $11,200 x ( 1 - ( 1 + 12% )^-3 ) / 12% = $26,900

Net present value is the sum of all cash inflows and outflows.

Net Present Value = ($30,000) + $26,900 = ($3,100)

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.

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