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 isn't equipped to do. Estimates regarding each machine are provided below.

Machine AMachine BOriginal cost$75,500$180,000Estimated life8 years8 yearsSalvage value00Estimated annual cash inflows$20,000$40,000Estimated annual cash outflows$5,000$10,000

Click here to view PV 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 AMachine BNet present valueenter a dollar amount rounded to 0 decimal places

enter a dollar amount rounded to 0 decimal places

Profitability indexenter the profitability index rounded to 2 decimal places

enter the profitability index rounded to 2 decimal places

Which machine should be purchased?

select a machine

Machine A

Machine B

should be purchased.