BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below. Machine A Machine B
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below. Machine A Machine B
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below.
| Machine A | Machine B | ||||
|---|---|---|---|---|---|
| Original cost | $78,200 | $182,000 | |||
| Estimated life | 8 years | 8 years | |||
| Salvage value | 0 | 0 | |||
| Estimated annual |
$19,800 | $39,600 | |||
| Estimated annual |
$5,130 |
$10,180
|
Calculate the
| Machine A | Machine B | ||||
|---|---|---|---|---|---|
| Net present value | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | |||
| Profitability index | enter the profitability index rounded to 2 decimal places | enter the profitability index rounded to 2 decimal places |
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