EX $16-34($Algo$)$ Profitability Index; Taxes $($Section

$($LO $16-7)$

The owner of Atlantic City Confectionary is considering the

purchase of a new semiautomatic candy machine. The machine

will cost $$21,000$ and last $12$ years. The machine is expected to

have no salvage value at the end of its useful life. The owner

projects that the new candy machine will generate $$4,600$ in

after$-$tax savings each year during its life $($including the

depreciation tax shield$).$

Use Appendix A for your reference.

Note: Use appropriate factor$($s$)$ from the tables provided.

Required:

Compute the profitability index on the proposed candy

machine, assuming an after$-$tax hurdle rate of $($a$)4$ percent, $($b$)6$

percent, and $($c$)8$ percent.

Note: Round your final answers to $2$ decimal places.