Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net p use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to O dec profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the fac Machine A Machine B Net present value Profitability index
Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net p use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to O dec profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the fac Machine A Machine B Net present value Profitability index
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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
$75,700
$182,000
Estimated life
8 years
8 years
Salvage value
Estimated annual cash inflows
$20,300
$39,700
Estimated annual cash outflows
$4,870
$10,050
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 O decimal places, e.g. 125 and
profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Machine A
Machine B
Net present value
Profitability index](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb927492b-754f-4428-82b7-6a84aa10f11f%2Faf20143d-a460-404d-9aea-a6391f1cc538%2Fbnzvdeg_processed.png&w=3840&q=75)
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.
Machine A
Machine B
Original cost
$75,700
$182,000
Estimated life
8 years
8 years
Salvage value
Estimated annual cash inflows
$20,300
$39,700
Estimated annual cash outflows
$4,870
$10,050
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 O decimal places, e.g. 125 and
profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Machine A
Machine B
Net present value
Profitability index
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