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help BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs
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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 it curcently isn't equipped to da. Estimates regarding each machine are provided below. Click here to view the factor table. Catculate the not precent value and profitability index of each machine. Assume a 9 \% discount rate. (dif the net present value is negabive. use elther a nejotive sign preceding the number eg -45 or parentheser es (45). Round answer for present value to 0 decimal ploces, es, 125 and profitability index to 2 decimal places, es, 10.50 . For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Compute the cash payback period and net present value of the proposed investment. (if the net present value is negotive, use either a negative slgn preceding the number es 45 or porentheses eg (45). Round answer for present value to 0 decimal places, es. 125. Round answer for Paybock period to 1 decimal ploce, es. 10.5. For calculation purposes, use 5 decimal places as displayed in the foctor table provided) Cash paybackped years Net present value \$ (b) Does the project meet the company's cash payback criteria? Dons it meet the net present value criteria for acceptance? Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck (not the least of which is that it runs). The new truck would cost \$56,990. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $7,700. At the end of 8 years, the company will sell the truck for an estimated $27,600. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset's estimated useful life. Larry Newton, a new manager, has suggested that the company, should not rely solely on the payback approach, but should also employ the net present value method when evaluating new pilects. The company's cost of capital is 8%. Click here to view the factor table. (a) Compute the cash payback peciod and net present value of the proposed irvestment, of 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 ploces, es. 125. Round answer for Payback period to 1 decimal place, eg. 10.5. For calculation purposes, use 5 decimal ploces as disployed in the foctor table provided, Cash payback period Net present value s (b) Does the project meet the companyscash payback criteria? Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9x discount rate. (if the net present volue is negotive, use either a negative sign preceding the number 8 s -45 or parentheses es (45). Round aqswer for present value to 0 decimal places, es. 125 and profitability inder to 2 decimal places, es. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Step by Step Solution
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