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 isnt equipped to do. Estimates regarding each machine are provided below.
| | | Machine A | | Machine B | |
| Original cost | | $75,900 | | $181,000 | |
| Estimated life | | 8 years | | 8 years | |
| Salvage value | | 0 | | 0 | |
| Estimated annual cash inflows | | $19,900 | | $39,800 | |
| Estimated annual cash outflows | | $5,020 | | $10,050 | |
Click here to view the factor table. 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 | | Machine B | |
| Net present value | | | | | |
| Profitability index | | | | | |
Which machine should be purchased?
. - e TABLE 1 Future Value of 1 Periods 1 2 3 + 5 6 7 3 9 10 11 49 5 6 1.00000 1.00000 100000 1.00000 104000 1.05000 1.06000 1.07000 108160 1.10250 1:12360 1:14490 1:12:36 1.15763 1.19102 1.22504 1.16986 121551 1.26248 1.21080 1.21665 1.27638 1.33823 1.40255 1.26532 1.34010 1.41852 150073 1.11503 1.-0710 1.50363 1.60578 1:36857 1.47746 1.59335 171819 1.42131 1.55133 1168948 1.83846 1.48024 1.62889 1.79085 196715 1.53945 1.71034 1.8980 2.10485 160103 1.79586 2.01220 2.25219 1:06502 1.88565 2.13293 2.40985 1.73168 1.97993 226090 2.57853 1.80044 07893 239656 2.75903 1.87296 218282 2.54015 2.05216 104790 29202 2.69277 1.15882 202582 2.40662 2.85434 3.37993 2.10655 2.52695 302560 3.61653 219512 265330 0714 3.84968 89 9 10 119 1.00000 1.00000 1.00000 1.00000 1.08000 1.09000 1.10000 1.11000 1.16640 1.18810 1.21000 1.23210 1.25971 120503 1.33100 1.36763 1.36049 1.41158 146410 1.51807 1.46933 1.53862 1.61051 168506 1 58687 1.67710 177156 1.87041 1.71382 1.82806 1.9.4872 2.07616 1.85093 1.99256 2.14359 2.30454 1.99900 2.17189 2.35795 2.85803 2.15892 236736 359374 281942 2.33164 2.58043 2.85312 3.15176 2.51817 2.81267 3.13843 3.49845 2.71962 3.06581 3.45227 3.88328 2.93710 3.34173 3.79750 4.31014 3.17217 3.64248 4.17725 -3.78459 3.42594 3,97031 +59497 5.31089 3.70002 4.32763 505447 5,89509 3.99602 4.71712 5.55992 6:54355 4.31570 5.14166 611591 7.26334 660965.60441 6,72750 8.06231 125 1.00000 1.12000 1.25440 1.40-193 1.57352 1.76234 1.97382 2.21068 2.47598 2.77308 3.10585 3.47855 3.89598 4.36349 4.88711 5.47357 6.13039 6,86604 7.68097 861276 964629 159 1.00000 1.15000 1.32250 1.52088 1.74901 2.01136 2.31306 2.66002 3.05902 351789 4.044556 4.65239 5.35025 6.15279 7.07571 8.13706 9.35762 10.76126 12.37545 14.23177 16.36654 13 14 15 16 17 15 19 20 c a SWEAT000HD e 0 3. 3 0 D 8 92593 85734 79383 73503 99 91743 84168 77218 TABLE 3 Present Value of 1 ( Periods 59 96154 95238 2 92456 90703 3 89900 86384 88480 82270 5 82193 78353 6 79031 74622 7 75992 71068 8 73069 67684 70259 10 67556 61391 6-4958 58468 12 2460 13 057 53032 57748 50507 15 55526 48102 16 53391 45811 $1337 43630 18 41552 19 47464 39573 20 45639 37689 % 94140 82000 83962 79209 .74726 70296 6506 62741 59190 55839 52679 19697 75 0.93458 0.87944 0.816.30 0.76290 0.71299 0.66634 0.62275 0.58201 054393 05085 0.47509 044401 0.41496 0.35782 0.36245 01573 031667 0.29586 0.27615 0.25842 63017 58149 54027 50025 16319 42888 39711 36770 3-40446 31524 29189 27027 25025 23171 21455 64993 59627 54703 50187 16043 42241 38753 35554 32618 29925 27454 25187 23107 21199 194-09 17843 10% 51409 82645 75132 68301 62092 56447 51316 46651 42410 38554 350-19 31863 28966 26333 23939 21763 19785 17986 16351 14864 1196 90090 81162 73119 65873 5945 5346+ 48166 43393 39092 35218 31728 28584 25751 23199 20900 18829 16963 .15282 13768 12403 1296 89286 .79719 71178 63552 56743 50663 45235 40388 36061 .32197 287-48 25668 22917 20462 18270 .16312 14564 13004 11611 10367 15% 86957 75614 .65752 57175 .49718 .43233 .37594 .32690 28426 24719 21494 18691 16253 .14133 12289 10687 .09293 OSOS 07027 06110 44230 41727 39365 37136 35034 33051 31180 o Entertainment and productivity All-in-One SALA TOROND 0 $ TABLE 3 Present Value of 1 Periods 2,9 Otto DO68 2 3 5 45238 07 86394 82270 96154 92456 88000 8640 8336 79200 1296 89286 .79719 21178 63552 56743 50663 45235 S. tocx TEDE 0665C 2291 7 8 7386 70259 07556 61958 10 67684 64161 61391 58468 55654 53033 50500 GOU 0.8744 816.30 0.76200 0.71299 0.666.14 062275 658201 051393 050825 0:47500 0.4401 0:4140 038782 06245 0:3673 031657 029586 0.27615 0.25842 70990 66506 2741 59190 55839 52679 1997 46834 4230 41727 39355 3713 35014 3051 31180 8 92503 5734 7973 21503 68058 63017 38349 54027 50023 46319 43888 39711 36720 31 31524 20189 27027 25025 23171 21455 91743 84168 77215 708-63 6-1993 54627 54703 5017 46043 22:41 338750 3559 326138 19925 27454 25187 2100 21100 194-09 1743 109 0909 82645 .75132 68301 62092 56447 51316 16651 42410 38554 150-19 31863 29966 26313 23939 21763 19785 17986 16351 14864 119 90020 81162 73119 65873 59145 5316 48166 43391 39092 35218 31728 28584 25751 23199 20900 -18829 16963 -15282 137 12403 155 86957 75614 65752 57175 19718 13233 37594 32690 28126 24719 21494 18691 16253 14133 12289 10687 09293 08081 HOS 57745 55626 58.391 5117 9363 17464 15619 14 15 to 12 18 10 20 36061 32197 787-48 25668 22917 20462 18270 1312 14564 13001 11611 10367 46811 4360 41552 39573 17699 LZOLO 01190 c a D 19 G All CHCECIES INC - 7 a TABLE4 Present Value of an Annuity of 1 Payments 2 3 4 6 7 8 10 11 12 13 14 15 16 17 18 19 20 96154 1.8880 2.77509 3.62990 445182 524214 600205 6.73274 743533 8.11090 70038 938507 9.98565 1056312 11.11839 11.65230 12.16567 12.65930 13.13394 55 79 89 95218 94300 093458 92593 1.85941 1.83339 1.80SOZ 1.78326 2.72325 2.67301 2.62432 257710 3.54995 3.46511 3.38721 331213 432948 4.21236 4.10020 3.09271 5.07569 4.91732 -4.76654 4.62288 5.78637 558238 5.38929 5.20637 6.46321 6 20979 5.97130 5.74664 7.10782 6.80169 6,51523 6.2.4689 7.72173 7.36009 7.02358 6.71008 810641 7.88687 7,49867 7.13896 886325 8.38384 7.94269 7.53608 9239357 8.85268 8.35765 7.90378 9.89864 9.29498 8.74547 824424 10.37966 9.71225 9.10791 855948 1083777 10.10590 9.44665 885137 11.27407 1047726 9.76322 9.12164 11.68959 10.82760 10.05909 9.37189 12.08532 11.15812 1033560 9.60360 12.46221 11.4992 10.5401 9.81815 9 10% 91743 90909 1.75911 1.73554 253130 2.48685 5.2.1972 3.16986 3.88965 3.79079 4.48592 4.35526 5.03295 4.86842 5.53482 5.33-493 5.99525 5.75202 6.41766 6.14457 6.80519 6.49506 7.160736.81369 7.48690710336 7.78615 7.36669 806069 7.00608 8.31256 782371 8.54363 802155 8.75563 8.20141 8.95012 8.36492 9.12855 8.51356 90090 1.71252 2.44371 3.10245 3.69590 4.23054 4.71220 5.14612 5.53705 5.88923 6.20652 6.49236 6.74987 6.98187 7.19087 737916 7.54879 7.70162 7.83929 7.96333 12% 15% 89286 .86957 1.69005 1.62571 2.40183 2.28323 3.03735 2.85498 3.60478 3.35216 4.11141 3.78448 4.56376 4.16042 4.96764 4.48732 5.32825 4.77158 5.650225.01877 5.93770 5.23371 6.19437 5.42062 6.42355 5.58315 6.62817 5.72448 6.81086 5.84737 6.97399 5.95424 7.11963 6,04716 7.24967 6.12797 7.36578 6.19823 7.46944 6.25933 O c . and productivity WONOSODOHD
