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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 Machine B Original cost $76,600 $179,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,900 $40,400 Estimated annual cash outflows $4,890 $9,940 Click here to view the factor table.

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

Machine A Machine B
Original Cost 76,600 179,000
Estimated Life 8 years 8 years
Salvage Value 0 0
Estimated annual cash Inflows 19,900 40,400
Estimated annual cash outflows 4,890 9,940

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