Exercise 25-04 (Video) Bonita 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 B $186,000 8 years Machine A Original cost $77,500 Estimated life 8 years Salvage value Estimated annual cash inflows $19,500 Estimated annual cash outflows $5,040 0 $39,600 $9,800 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 O 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. | (0) Periods 4% 5% 6% 7% 8% 9% 10% 1% 12% 0 1 .00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1 1.04000 1.05000 1.06000 1.07000 1.08000 1.09000 1.10000 1.11000 1.12000 2 1 .08160 1.10250 1.12360 1.14490 1.16640 1.18810 1.21000 1.23210 1.25440 | 3 1.12486 1.15763 1.19102 1.22504 1.25971 1.29503 1.33100 1.36763 1.40493 15% 1.00000 1.15000 1.32250 1.52088 1.16986 1.21551 1.26248 1.31080 1.36049 1.41158 1.46410 1.51807 1.57352 1.74901 | 5 | 6 | 7 1.21665 1.27628 1.33823 1.40255 1.46933 1.53862 1.61051 1.68506 1.76234 2.01136 1.26532 1.34010 1.41852 1.50073 1.58687 1.67710 1.77156 1.87041 1.97382 2.31306 1.31593 1.40710 1.50363 1.60578 1.71382 1.82804 1.94872 2.07616 2.21068 2.66002 | 1,36857 1.47746 1.59385 1.71819 1.85093 1.99256 2.14359 2.30454 2.47596 3.05902 1.42331 1.55133 1.68948 1.83846 1.99900 2.17189 2.35795 2.55803 2.77308 3.51788 | 10 1.48024 1.62889 1.79085 1.96715 2.15892 2.36736 2.59374 2.83942 3.10585 4.04556 | 11 1.53945 1.71034 1.89830 2.10485 2.33164 2.58043 2.85312 3.15176 3.47855 4.65239 | 12 1.60103 1.79586 2.01220 2.25219 2.51817 2.81267 3.13843 3.49845 3.89598 5.35025 | 13 | 14 1.66507 1.88565 2.13293 2.40985 2.71962 3.06581 3.45227 3.88328 4.36349 1.73168 1.97993 2.26090 2.57853 2.93719 3.34173 3.79750 4.31044 4.88711 6.15279 7.07571 1.80094 2.07893 2.39656 2.75903 3.17217 3.64248 4.17725 4.78459 5.47357 8.13706 16 1.87298 2.18287 2.54035 2.95216 3.42594 3.97031 4.59497 5.31089 6.13039 9.35762 | 17 1.94790 2.29202 2.69277 3.15882 3.70002 4.32763 5.05447 5.89509 6.86604 10.76126 | 18 2.02582 2.40662 2.85434 3.37993 3.99602 4.71712 5.55992 6.54355 7.68997 12.37545 | 19 2 .10685 2.52695 3.02560 3.61653 4.31570 5.14166 6.11591 7.26334 8.61276 14.23177 | 20 2.19112 2.65330 3.20714 3.86968 4.66096 5.60441 6.72750 8.06231 9.64629 16.36654 Table 2 Future Value of an Annuity of 1 (n) Payments 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 1 2 3 5 .00000 2.04000 3.12160 4.24646 5.41632 .63298 7.89829 9.21423 10.58280 1.00000 2.05000 3.15250 4.31013 5.52563 6.80191 8.14201 9.54911 11.02656 1.00000 2.06000 3.18360 4.37462 5.63709 6.97532 8.39384 9.89747 11.49132 1.000 1.00000 1.00000 2.0700 2.08000 2.09000 3.21493.24640 3.27810 4.4399 4.50611 4.57313 5.7507 5.86660 5.98471 7.1533 7.33592 7.52334 8.6540 8.922809.20044 10.2598 10.63663 11.02847 11.9780 12.48756 13.02104 1.00000 2.10000 3.31000 4.64100 6.10510 7.71561 9.48717 11.43589 13.57948 1.00000 2.11000 3.34210 4.70973 6.22780 7.91286 9.78327 11.85943 14.16397 1.00000 2.12000 3.37440 4.77933 6.35285 8.11519 10.08901 12.29969 14.77566 1.00000 2.15000 3.47250 4.99338 6.74238 8.75374 11.06680 13.72682 16.78584 6 6 7 8 10 12.00611 12.57789 13.18079 13.8164 14.48656 15.19293 15.93743 16.72201 17.54874 20.30372 11 13.48635 14.20679 14.97164 15.7836 16.64549 17.56029 18.53117 19.56143 20.65458 24.34928 12 15.02581 15.91713 16.86994 17.8885 18.97713 20.14072 21.38428 22.71319 24.13313 29.00167 13 16.62684 17.71298 18.88214 20.1406 21.49530 22.95339 24.52271 26.21164 28.02911 34.35192 14 18.29191 19.59863 21.01507 22.5505 24.21492 26.01919 27.97498 30.09492 32.39260 40.50471 15 20.02359 21.57856 23.27597 25.1290 27.15211 29.36092 31.77248 34.40536 37.27972 47.58041 16 21.82453 23.65749 25.67253 27.8881 30.32428 33.00340 35.94973 39.18995 42.75328 55.71747 17 23.69751 25.84037 28.21288 30.8402 33.75023 36.97351 40.54470 44.50084 48.88367 65.07509 18 25.64541 28.13238 30.90565 33.9990 37.45024 41.30134 45.59917 50.39593 55.7497275.83636 27.67123 30.53900 33.75999 37.3790 41.44626 46.01846 51.15909 56.93949 63.43968 88.21181 19 20 29.77808 33.06595 36.78559 40.9955 45.76196 51.16012 57.27500 64.2028372.05244 102.44358 Table 3 Present Value of 1 (n) Periods 1 4% 5% .96154.95238 6% 7% 8% 9% 10% 11% 94340.93458.92593.91743.90909.90090 12% 89286 15% 86957 .92456 90703 89000 87344 85734 84168 82645 .81162 79719.75614 3 4 5 6 7 8 9 10 11 12 13 .88900 .86384 83962 .81630 79383 77218 75132.73119 71178 .65752 .85480 82270 792097629073503 70843.68301 .65873.63552.57175 .82193 .78353 .74726 .71299.68058 .64993.62092.59345.56743 49718 79031 74622 70496.66634 .63017 .59627.56447.53464 50663.43233 .75992 71068 .66506 .62275 .58349 .54703 51316 48166 45235 .37594 73069 .67684 62741 .58201 .54027.50187 46651 4339340388 .32690 .70259.64461 .59190 .54393 .50025 .46043 42410 39092 36061 28426 .67556 .61391 .55839.50835 46319 42241 .38554 35218 32197 24719 .64958 .58468 .52679 47509.42888 38753.35049 .31728 28748 21494 .62460 .55684 49697 44401 .39711.35554 .31863 28584 25668 18691 .60057 .53032 46884 41496 36770 32618 28966 25751 22917 16253 14 .57748 .50507 44230 38782.34046 2992526333 23199 20462 14133 15 16 17 18 19 20 .55526 48102 41727 .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 13004 .08081 .47464 39573 33051 .27615 23171 .19449 16351 .13768 11611 .07027 .45639.37689 31180 25842 .21455 17843.14864 12403 10367 .06110 Table 4 Present Value of an Annuity of 1 (n) Payments 4% .96154 5% .95238 6% 94340 7% 93458 8% .92593 9% .91743 10% 90909 11% .90090 12% .89286 15% .86957 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 2 3 2.775092.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 4 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 5 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 5.24214 5.075694.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 6.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 6.73274 6.463216.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 7.43533 .11090 7.10782 6.80169 7.721737.36009 6.51523 7.02358 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 6.71008 6.41766 6.14457 5.88923 5.650225 .01877 10 8 11 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 12 9.38507 8.863258.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 13 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 14 10.56312 9.89864 9.294988.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 15 16 11.11839 11.65230 10.37966 10.83777 9.71225 10.10590 9.10791 9.44665 8.55948 8.85137 8.060697.60608 7.19087 6.81086 5.84737 8.31256 7.82371 7.37916 6.97399 5.95424 17 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 18 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8.20141 7.701627.24967 6.12797 19 1 3.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7.839297 .36578 6.19823 20 13.59033 12.46221 11.46992 10.59401 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933