Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sheridan Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that

image text in transcribed

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Sheridan 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 here. 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 0 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.) Which machine should be purchased? TABLE 1 Future Value of 1 \begin{tabular}{ccccccccccc} (n) Periods & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 0 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 \\ \hline 1 & 1.04000 & 1.05000 & 1.06000 & 1.07000 & 1.08000 & 1.09000 & 1.10000 & 1.11000 & 1.12000 & 1.15000 \\ \hline 2 & 1.08160 & 1.10250 & 1.12360 & 1.14490 & 1.16640 & 1.18810 & 1.21000 & 1.23210 & 1.25440 & 1.32250 \\ \hline 3 & 1.12486 & 1.15763 & 1.19102 & 1.22504 & 1.25971 & 1.29503 & 1.33100 & 1.36763 & 1.40493 & 1.52088 \\ \hline 4 & 1.16986 & 1.21551 & 1.26248 & 1.31080 & 1.36049 & 1.41158 & 1.46410 & 1.51807 & 1.57352 & 1.74901 \\ \hline 5 & 1.21665 & 1.27628 & 1.33823 & 1.40255 & 1.46933 & 1.53862 & 1.61051 & 1.68506 & 1.76234 & 2.01136 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 6 & 1.26532 & 1.34010 & 1.41852 & 1.50073 & 1.58687 & 1.67710 & 1.77156 & 1.87041 & 1.97382 & 2.31306 \\ \hline 7 & 1.31593 & 1.40710 & 1.50363 & 1.60578 & 1.71382 & 1.82804 & 1.94872 & 2.07616 & 2.21068 & 2.66002 \\ \hline 8 & 1.36857 & 1.47746 & 1.59385 & 1.71819 & 1.85093 & 1.99256 & 2.14359 & 2.30454 & 2.47596 & 3.05902 \\ \hline 9 & 1.42331 & 1.55133 & 1.68948 & 1.83846 & 1.99900 & 2.17189 & 2.35795 & 2.55803 & 2.77308 & 3.51788 \\ \hline 10 & 1.48024 & 1.62889 & 1.79085 & 1.96715 & 2.15892 & 2.36736 & 2.59374 & 2.83942 & 3.10585 & 4.04556 \\ \hline \end{tabular} \begin{tabular}{lllllllllll} \hline 11 & 1.53945 & 1.71034 & 1.89830 & 2.10485 & 2.33164 & 2.58043 & 2.85312 & 3.15176 & 3.47855 & 4.65239 \\ \hline 12 & 1.60103 & 1.79586 & 2.01220 & 2.25219 & 2.51817 & 2.81267 & 3.13843 & 3.49845 & 3.89598 & 5.35025 \\ \hline 13 & 1.66507 & 1.88565 & 2.13293 & 2.40985 & 2.71962 & 3.06581 & 3.45227 & 3.88328 & 4.36349 & 6.15279 \\ \hline 14 & 1.73168 & 1.97993 & 2.26090 & 2.57853 & 2.93719 & 3.34173 & 3.79750 & 4.31044 & 4.88711 & 7.07571 \\ \hline 15 & 1.80094 & 2.07893 & 2.39656 & 2.75903 & 3.17217 & 3.64248 & 4.17725 & 4.78459 & 5.47357 & 8.13706 \\ \hline \end{tabular} \begin{tabular}{ccccccccccc} \hline 16 & 1.87298 & 2.18287 & 2.54035 & 2.95216 & 3.42594 & 3.97031 & 4.59497 & 5.31089 & 6.13039 & 9.35762 \\ \hline 17 & 1.94790 & 2.29202 & 2.69277 & 3.15882 & 3.70002 & 4.32763 & 5.05447 & 5.89509 & 6.86604 & 10.76126 \\ \hline 18 & 2.02582 & 2.40662 & 2.85434 & 3.37993 & 3.99602 & 4.71712 & 5.55992 & 6.54355 & 7.68997 & 12.37545 \\ \hline 19 & 2.10685 & 2.52695 & 3.02560 & 3.61653 & 4.31570 & 5.14166 & 6.11591 & 7.26334 & 8.61276 & 14.23177 \\ \hline 20 & 2.19112 & 2.65330 & 3.20714 & 3.86968 & 4.66096 & 5.60441 & 6.72750 & 8.06231 & 9.64629 & 16.36654 \\ \hline \end{tabular} Rutne Tolno nf an A miniternf 1 trom TABLE 4 Present Value of an Annuity of 1 \begin{tabular}{ccccccccccc} (n) Payments & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 1 & .96154 & .95238 & .94340 & .93458 & .92593 & .91743 & .90909 & .90090 & .89286 & .86957 \\ \hline 2 & 1.88609 & 1.85941 & 1.83339 & 1.80802 & 1.78326 & 1.75911 & 1.73554 & 1.71252 & 1.69005 & 1.62571 \\ \hline 3 & 2.77509 & 2.72325 & 2.67301 & 2.62432 & 2.57710 & 2.53130 & 2.48685 & 2.44371 & 2.40183 & 2.28323 \\ \hline 4 & 3.62990 & 3.54595 & 3.46511 & 3.38721 & 3.31213 & 3.23972 & 3.16986 & 3.10245 & 3.03735 & 2.85498 \\ \hline 5 & 4.45182 & 4.32948 & 4.21236 & 4.10020 & 3.99271 & 3.88965 & 3.79079 & 3.69590 & 3.60478 & 3.35216 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 6 & 5.24214 & 5.07569 & 4.91732 & 4.76654 & 4.62288 & 4.48592 & 4.35526 & 4.23054 & 4.11141 & 3.78448 \\ \hline 7 & 6.00205 & 5.78637 & 5.58238 & 5.38929 & 5.20637 & 5.03295 & 4.86842 & 4.71220 & 4.56376 & 4.16042 \\ \hline 8 & 6.73274 & 6.46321 & 6.20979 & 5.97130 & 5.74664 & 5.53482 & 5.33493 & 5.14612 & 4.96764 & 4.48732 \\ \hline 9 & 7.43533 & 7.10782 & 6.80169 & 6.51523 & 6.24689 & 5.99525 & 5.75902 & 5.53705 & 5.32825 & 4.77158 \\ \hline 10 & 8.11090 & 7.72173 & 7.36009 & 7.02358 & 6.71008 & 6.41766 & 6.14457 & 5.88923 & 5.65022 & 5.01877 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 11 & 8.76048 & 8.30641 & 7.88687 & 7.49867 & 7.13896 & 6.80519 & 6.49506 & 6.20652 & 5.93770 & 5.23371 \\ \hline 12 & 9.38507 & 8.86325 & 8.38384 & 7.94269 & 7.53608 & 7.16073 & 6.81369 & 6.49236 & 6.19437 & 5.42062 \\ \hline 13 & 9.98565 & 9.39357 & 8.85268 & 8.35765 & 7.90378 & 7.48690 & 7.10336 & 6.74987 & 6.42355 & 5.58315 \\ \hline 14 & 10.56312 & 9.89864 & 9.29498 & 8.74547 & 8.24424 & 7.78615 & 7.36669 & 6.98187 & 6.62817 & 5.72448 \\ \hline 15 & 11.11839 & 10.37966 & 9.71225 & 9.10791 & 8.55948 & 8.06069 & 7.60608 & 7.19087 & 6.81086 & 5.84737 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 16 & 11.65230 & 10.83777 & 10.10590 & 9.44665 & 8.85137 & 8.31256 & 7.82371 & 7.37916 & 6.97399 & 5.95424 \\ \hline 17 & 12.16567 & 11.27407 & 10.47726 & 9.76322 & 9.12164 & 8.54363 & 8.02155 & 7.54879 & 7.11963 & 6.04716 \\ \hline 18 & 12.65930 & 11.68959 & 10.82760 & 10.05909 & 9.37189 & 8.75563 & 8.20141 & 7.70162 & 7.24967 & 6.12797 \\ \hline 19 & 13.13394 & 12.08532 & 11.15812 & 10.33560 & 9.60360 & 8.95012 & 8.36492 & 7.83929 & 7.36578 & 6.19823 \\ \hline 20 & 13.59033 & 12.46221 & 11.46992 & 10.59401 & 9.81815 & 9.12855 & 8.51356 & 7.96333 & 7.46944 & 6.25933 \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting

Authors: Jawahar Lal, Seema Srivastav

6th Edition

9353168384, 978-9353168384

More Books

Students also viewed these Accounting questions

Question

Define organization development (OD)

Answered: 1 week ago