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 $78,500 $186,200

Estimated life 8 years 8 years

Salvage value 0 0

Estimated annual cash inflows $20,280 $40,450

Estimated annual cash outflows $5,000 $9,880

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

Which machine should be purchased?