Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 isn't equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $76,600 $190,000 Estimated life 8 years 8 years Salvage value Estimated annual cash inflows $20,000 $40,500 Estimated annual cash outflows $5,140 $10,100 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 A Machine B Net present value Profitability index Which machine should be purchased? should be purchased. Table 3 Present Value of 1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% .96154 92456 95238 90703 94340 89000 93458 92593917439090990090 87344 85734 84168 82645 81162 89286 79719 86957 75614 3 10 11 12 13 14 15 16 17 88900 863848396281630 79383 77218 75132 7311971178 65752 .85480 82270 79209 76290 73503 70843.68301.65873 .63552 57175 .82193 78353 74726 71299.68058 .64993.62092 59345 56743 49718 .79031 74622 70496 66634 63017 5962756447 53464 50663 43233 .75992 71068 66506 62275 5834954703 51316 48166 45235 37594 .7306967684 62741 58201 54027 5018746651 .4339340388 32690 .70259 64461 59190 54393 50025 .4604342410 39092 36061 28426 .67556 61391 5583950835 46319_4224138554 35218 32197 24719 64958 58468 52679.47509.42888 38753 35049 3172828748 21494 .62460 55684 49697 44401 39711 35554 31863 28584 25668 18691 .6005753032.46884 .41496 3677032618 28966 25751 2291716253 57748 5050744230 38782 34046 29925 26333 23199 20462 14133 55526 4810241727 36245 31524 27454 23939 20900 1827012289 53391 .45811 39365 33873 2918925187 21763 1882916312 10687 51337 43630 37136 31657 27027 23107 19785 16963 14564 09293 .49363 41552 35034 29586 25025 21199 1798615282 1300408081 .47464 39573 33051 27615 23171 19449 16351 13768 11611 07027 4563937689 31180 25842 21455 1784314864 1240310367 06110 19 20
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started