46. Johnson Company is considering purchasing one of two new machines. The followin estimates are available for each machine: Machine 1 Machine 2 Initial cost $152.000 $169,000 Annual cash inflows 50,000 60,000 Annual cash outflows 15,000 20,000 Estimated useful life 6 years 6 years The company's minimum required rate of return is 9%. Period Present Value of an Annuity of 1 10% 12% 4.486 4.355 4.231 4.111 9% 18% 4.623 11% 15% 3.784 Instructions (a) Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each machine. (b) Which machine should be purchased? ABC 146. Johnson Company is considering purchasing one of two new machines. 2 The following estimates are available for each machine: Machine 1 Machine 2 4 Initial cost $152,000 $169,000 5 Annual cash inflows $50,000 $60,000 6 Annual cash outflows $15,000 $20,000 7. Estimated useful life The company's minimum required rate of return is 9%. Present Value of an annuity of $1 10 Period 8% 9% 10% 11% 12% 15% 4.623 4.486 4.355 4.231 4.111 3.784 12 (a) Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each machine Net Present Value Machine 1 Machine 2 16 Present Value Cash Flow 17 Investment 18 NPV 19 Profitable Index Machine 1 Machine 2 21 Present Value Cash Flow 22 Investment 23 Profitable Index IRR Machine 1 Machine 2 26 Investment 27. Ner Cash Flow 28 IRR Factor 29 IRR rate Using The IRR Excel Formula Which machine should be purchased