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PLEASE SHOW ALL RELEVANT CALCULATIONS Question 2 KSU Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for
PLEASE SHOW ALL RELEVANT CALCULATIONS
Question 2 KSU 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 A Machine B Original cost $106,000 $ 175,000 Estimated life 8 years 8 years Salvage value $3,000 Estimated annual cash inflows $30,000 $45,000 Estimated annual cash outflows $10,000 $15,000 -0- REQUIRED (A) Calculate the following for each machine. ).Net present value assuming a 9% discount rate. (Round-off NPV to the nearest whole number). (8 marks) (i). Profitability index (4 marks (B) Which machine should be purchased? WhyStep by Step Solution
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