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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

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

Original cost

$75,500 $190,000

Estimated life

8 years 8 years

Salvage value

0 0

Estimated annual cash inflows

$19,600 $40,000

Estimated annual cash outflows

$4,990 $9,970

Calculate the net present value and profitability index of each machine. Assume a 9% discount rate.

Machine A

Net present value

enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places

Profitability index

enter the Profitability index rounded to 2 decimal places

Which machine should be purchased?

select a machine Machine AMachine B should be purchased.

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