Oriole Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company tobid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here.Original costEstimated lifeSalvage valueEstimated annual cash inflowsEstimated annual cash outflowsClick here to view PV table.Net present valueProfitability indexMachine AWhich machine should be purchased?Machine A$76,7008 years$20,100$4,910Machine A0Calculate 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 andprofitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)0should be purchased.6478Machine B1.08$188,0008 years0$40,200$10,130Machine B(10409)0..94

A financial term called net present value (NPV) is used to assess how profitable a project or…

Oriole 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 here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view PV table. Net present value Machine A $76,700 8 years 0 Profitability index $20,100 $4,910 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, 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 Which machine should be purchased? Machine A should be purchased. 6478 Machine B $188,000 8 years 0 1.08 $40,200 $10,130 Machine B (10409) 0..94

Oriole 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 here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view PV table. Net present value Machine A $76,700 8 years 0 Profitability index $20,100 $4,910 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, 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 Which machine should be purchased? Machine A should be purchased. 6478 Machine B $188,000 8 years 0 1.08 $40,200 $10,130 Machine B (10409) 0..94

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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