Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value $ Machine A $220,000 Profitability index 8 years 0 $72,000 $31,000 Machine B $294,000 Click here to view PV tables. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to the nearest whole dollar, eg. 5,275 and profitability index to 2 decimal places, eg 15.25. Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided) Machine A 8 years 0 $87,000 $36,000 Machine B
Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value $ Machine A $220,000 Profitability index 8 years 0 $72,000 $31,000 Machine B $294,000 Click here to view PV tables. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to the nearest whole dollar, eg. 5,275 and profitability index to 2 decimal places, eg 15.25. Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided) Machine A 8 years 0 $87,000 $36,000 Machine B
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 1MAD: San Lucas Corporation is considering investment in robotic machinery based upon the following...
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![Indigo 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 PV tables.
Net present value $
Profitability index
Machine A
$220,000
Byears
O
Machine A
Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to the
nearest whole dollar, eg. 5,275 and profitability index to 2 decimal places, eg 15.25. Enter negative amounts using either a negative sign
preceding the number eg -45 or parentheses eg. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided)
Machine B
Which machine should be purchased?
$72,000
$31,000
Machine A
Machine B
$294,000
8 years
0
587.000
$36.000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8fcb2168-4edc-441d-8d35-bd7abdfcf6e5%2F4a88b6b2-dc70-46a3-b27a-f39e3c7ca189%2Fp2l75h8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Indigo 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 PV tables.
Net present value $
Profitability index
Machine A
$220,000
Byears
O
Machine A
Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to the
nearest whole dollar, eg. 5,275 and profitability index to 2 decimal places, eg 15.25. Enter negative amounts using either a negative sign
preceding the number eg -45 or parentheses eg. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided)
Machine B
Which machine should be purchased?
$72,000
$31,000
Machine A
Machine B
$294,000
8 years
0
587.000
$36.000
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