Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please answer all parts and 1 AutoSave 0.00 Wey Morl7JETCH2(1) Excel Search File Home Insert Page Layout Formulas Data Review View Help DYMO Label QuickBooks
please answer all parts and 1
AutoSave 0.00 Wey Morl7JETCH2(1) Excel Search File Home Insert Page Layout Formulas Data Review View Help DYMO Label QuickBooks B18 1 X DE 1 E12.4 Compute net present value and profitability index 2 BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would 3 make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates 4 regarding each machine are provided below. Machine A Machine B Original cost $75,500 $180,000 Estimated lite 8 years 8 years Salvage value - -- Estimated annual cash inflows $20,000 $40,000 Estimated annual cash outflows $5,000 $10.000 -0- 12 Instructions 13 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. 14 Which machine should be purchased? 15 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". Machine A Present Value X 9% Discount Factor 5.53482 0 .50187 Cash Flows Value Value Present value of net annual cash flows Present value of salvage value X Less: Capital investment Net present value Profitability Index Machine B Cash Flows E12-2012- 4P121A P12-4ACD12Extracredit X 9% Discount Factor Present Value - Type here to search @element AnoSave OB2 File Home Insert 18 . Wey. My 1.7.ET_012 (1) Excel Formulas Data Review View S earch DYMO Label QuickBooks Help Page Layout fo Present value of salvage value Value X 0.50187 Value Less: Capital investment Net present value Profitability Index Value Value 8 Machine B Present Value Cash Flows Present value of net annual cash flows Present value of salvage value 9% Discount Factor 15,53482 0.50187 Value X Value Capital investment Net present value Profitability Index = Value Value Response Assume that the original cost of Machine A changed to $85,000 and has a salvage value of $10,000. Which machine should be purchased? E122612-4 P121A P12.4A CD2 credit Type here to search @element Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started