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Original cost Estimated life Machine A Machine B $76,100 $184,000 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,900 $40,300

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Original cost Estimated life Machine A Machine B $76,100 $184,000 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,900 $40,300 Estimated annual cash outflows $5,140 $10,130 Click here to view the factor 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.) Net present value Profitability index Machine A Which machine should be purchased? should be purchased. Machine B

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