Butler 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. Butler requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows: Periods12%10.892921.690132.401843.0373 What is the net present value of the machine?
A. $30,000.
B. $(3,100).
C. $26,900.
D. $24,018.
E. $(29,520).
Answer: B
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