Question
A company is considering the replacement of its old, fully depreciated sanding machine. Machine A which has a cost of $63,271.00, a 5-year expected life,
A company is considering the replacement of its old, fully depreciated sanding machine. Machine A which has a cost of $63,271.00, a 5-year expected life, and after-tax cash flows (labor savings and depreciation) of $80,000.00 per year. Assume that Wilkins's cost of capital is 16.0%. What is the Profitability Index (PI) of Machine A?
5.83
7.50
4.14
3.63
2.11
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College Accounting
Authors: Heintz and Parry
20th Edition
1285892070, 538489669, 9781111790301, 978-1285892078, 9780538489669, 1111790302, 978-0538745192
