A Company Bought a Machine That Has an Expected Life

A company bought a machine that has an expected life of 7 years and no salvage value. Management estimates that this machine will generate annual after-tax net income of $540. If the accounting rate of return is 12%, what was the purchase price of the machine?

A) $4,500
B) $540
C) $31,500
D) $9,000
E) $2,250