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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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $77,000 8 years Profitability index 0 $19,900 $4,800 Machine A Machine B $188,000 8 years 4 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, eg 125 and profitability index to 2 decimal places, eg 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) 0 $40,200 $9,860 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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $77,000 8 years Profitability index 0 $19,900 $4,800 Machine A Machine B $188,000 8 years 4 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, eg 125 and profitability index to 2 decimal places, eg 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) 0 $40,200 $9,860 Machine B

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $77,000 8 years Profitability index 0 $19,900 $4,800 Machine A Machine B $188,000 8 years 4 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative. use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, eg 125 and profitability index to 2 decimal places, eg 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) 0 $40,200 $9,860 Machine B
Transcribed Image Text: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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $77,000 8 years Profitability index 0 $19,900 $4,800 Machine A Machine B $188,000 8 years 4 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative. use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, eg 125 and profitability index to 2 decimal places, eg 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) 0 $40,200 $9,860 Machine B
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