Current Attempt in Progress 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 Click here to view the factor table. Net present value Profitability index Machine A Which machine should be purchased? $76,600 8 years should be purchased. 0 $20,000 Machine A $5,140 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 placis, 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.) Machine B $190,000 8 years 0 $40,500 $10,100 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
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Subject: accounting 

Current Attempt in Progress
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
Click here to view the
Net present value
Profitability index
table.
Which machine should be purchased?
eTextbook and Media
Save for Later
Machine A
$76,600
8 years
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, 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)
should be purchased.
Machine A
0
$20,000
$5,140
Machine B
$190,000
8 years
0
$40,500
$10,100
Machine B
Transcribed Image Text:Current Attempt in Progress 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 Click here to view the Net present value Profitability index table. Which machine should be purchased? eTextbook and Media Save for Later Machine A $76,600 8 years 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, 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) should be purchased. Machine A 0 $20,000 $5,140 Machine B $190,000 8 years 0 $40,500 $10,100 Machine B
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