Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sunland 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 transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Sunland 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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Machine A $77.500 8 years 0 Machine B $186,000 8 years 0 $19,500 $5.040 $39.600 $9,800 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 es (45), Round answer for present value to decimal places, es. 125 and profitability Index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A Machine B Net present value Profitability index Which machine should be purchased? should be purchased. TABLE 1 Future Value of 1 4% Periods 5% 9% 10% 11% 15% 12% 7% 1.00000 1.00000 1.00000 0 1.00000 1.00000 1.00000 1.00000 1.08000 1.00000 1.1 2000 1 1.08000 1.00000 1.10000 1.21000 1.15000 1.11000 1.00000 1.06000 1.12360 1.19102 10000 1.08160 1.12486 1.07000 1.14490 1.05000 1.10250 1.15763 2 1.16640 1.32250 1.18810 1.29503 1.25440 1.40493 3 1.22504 1.33100 1.23210 1.36763 1.51807 1.68506 1.52088 1.74901 4 1.16986 1.31080 1.25971 1.36049 1.46933 1.41158 1.46410 1.21551 1.27628 1.57352 1.26248 1.33823 5 1.21665 1.40255 1.53862 1.61051 2.01136 1.76214 6 1.26532 1.41852 1.58687 1.77156 1.34010 1.40710 1.50073 1.60578 1.67710 1.82804 1.87041 2.07616 2.31306 2.66002 7 1.50363 1.71382 1.31593 1.36857 1.97382 2.21068 2.47596 8 1.59385 1.71819 1.99256 1.47746 1.55133 194872 2.14359 2.35795 9 3.05902 3.51788 185093 1.99900 2.15892 1.42331 1.48034 1.68948 1.7908S 2.77308 1.83846 1.96715 2.90454 2.55803 2.83942 2.17189 2.36736 10 1.62889 2.59374 3.10585 4.04556 11 1.89830 2.85312 3.47855 4.65239 2.10485 2.25219 1.71034 1.79586 1.88565 12 3.15176 3.49845 201220 2.33164 2.51817 2.71962 1.53945 1.60103 1.66507 1.78163 3.89598 5.35025 13 2.13293 2.58043 2.81267 3.06581 3.34173 3.64248 2.40985 2.57853 3.13843 3.45227 3.79750 3.88328 14 2.26090 4.31044 1.97993 2.07893 2.93719 3.17217 4.36349 4.88711 5.47357 6.15279 7.07571 8.13706 15 1.80094 2.39656 2.75903 4.17725 4.78459 16 2.18287 2.54035 2.95216 5.31089 1.87298 1.94790 3.42594 3.70002 3.97031 4.32763 6.13039 6.6604 9.35762 10.76126 17 2.29202 2.69277 5.89509 3.15882 3.37993 4.59497 5.05447 5.59992 6,11591 18 2.02582 2.85434 3.99602 7.68997 12.37545 2.40662 2.52695 19 210685 4.31570 4.71712 5.14166 5.60441 3.02560 3.20714 8.61276 6.54355 7.26334 8.06231 3.61653 386968 14.23177 20 2.19112 265330 4.66096 6.72750 9.64629 16 36654 TABLE 2 Future Value of an Annuity of 1 5% 6% 7% 8% 9% 10% 11% 12% 15% Payments 1 1.00000 1.00000 1.0000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 2.06000 2.04000 2.050.00 2.08000 2.10000 2.12000 2.15000 2 3 2.0700 3.2149 2.11000 3.34210 3.18360 3.24640 2,09000 3.27810 4.57313 3.31000 3.12160 4.24646 3.47250 3.15250 4.31013 3.37440 4.77933 4 4.37462 4.50611 4.64100 4.70973 4.99338 4.4399 5.7507 5 5.41632 5.52563 5.63709 5.86660 5.98471 6.10510 6.22780 6.35285 6.74238 6.63298 6.80191 6.97532 7.1533 7.52334 7.71561 8.75374 7.91286 9.78327 8.11519 10.08901 7.89829 8.14201 8.39384 7.33592 8.92280 10.63663 8.6540 9.48717 7 3 11.06680 9.20044 11.02847 9.21423 10.2598 11.43589 11.89943 12.29969 13.72682 9.54911 11.02656 9.89747 11.49132 9 10.58280 13.57948 14.77566 16,78584 11.9780 13.8164 12.48756 14.48656 13.02104 15.19293 14.16397 16.72201 10 12.00611 12.57789 13.18079 15.93743 17.54874 20,30372 11 13.48635 17.56029 18.53117 24,34928 14.20679 15.91713 14.97164 16.86994 16.64549 18.97713 15.7836 17.8885 20.1406 19.56143 22.71319 20.65458 24.13313 12 15.02581 29.00167 34.35192 16.62684 17.71298 18.88214 20.14072 22.95339 26.01919 21.49530 24.21492 21.38428 24.52271 27.97498 31.77248 28.02911 32.39260 14 19.59863 21.01507 22.5505 26.21164 30.09492 34.40536 18.29191 20.02359 40.50471 15 21.57856 23.27597 25.1290 27.15211 29.36092 37.27972 47.58041 16 21.82453 35.94973 42.75328 55.71747 23.65749 25.84037 25.67253 28.21288 27.8881 30.8402 33.00340 36.97351 30.32428 33.75023 37.45024 39.18995 44.50084 17 40.54470 48.88367 23.69751 25.64541 65.07509 18 28.13238 30.90565 33.9990 41.30134 50.39593 75.83636 45.59917 51.15909 55.74972 63.43968 19 37.3790 46.01846 56.93949 88.21181 27.67123 29.77NOS 30.53900 33.06595 33.75999 36.78559 41.44626 45.76196 20 40.9955 51.16012 57.27500 64.20283 72.05244 102.44358 TABLE 3 Present Value of 1 (n) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 96154 95238 94340 93458 92593 91743 90909 90090 .89286 86957 2 89000 .87344 .84168 .81162 .75614 92456 88900 90703 .86384 .82270 3 .82645 .75132 .85734 .79383 73503 .77218 73119 65752 .81630 .76290 .83962 .79209 .74726 .79719 71178 63552 .56743 4 85480 .70843 .68301 57175 65873 .59345 5 82193 78353 .71299 .68058 .64993 .62092 49718 6 70496 .66634 63017 59627 56447 .53464 50663 79031 75992 74622 .71068 7 .62275 58349 -54703 51316 .48166 45235 66506 62741 43233 37594 .32690 28426 8 .67684 58201 54027 50187 46651 43393 73069 70259 40388 .36061 9 54393 .42410 .64461 .61391 59190 .55839 50025 46319 46043 .42241 39092 .35218 10 67556 50835 .38554 -32197 24719 64958 58468 -47509 42888 .38753 .35049 31728 28748 21494 52679 -49697 12 .62460 44401 19711 .35554 25668 18691 55684 .53032 31863 28966 28584 25751 13 60057 46884 41496 .32618 22917 36770 .34046 14 57748 50507 .44230 2.3199 20462 38782 36245 29925 .27454 26333 23939 .16253 14133 12289 15 55526 48102 .41727 31524 20900 18270 16 25187 16312 10687 45811 4M630 21763 19785 18829 16963 17 29189 27027 25025 23107 53391 51337 49363 47464 09293 -39365 .37136 35034 33051 33873 .31657 29586 27615 18 41552 21199 15282 14564 .1.2004 .11611 17986 16351 19 19449 13768 39573 .37689 23171 21455 08081 07027 06110 20 45639 31180 25842 .17843 14864 12403 10367 TABLE4 Present Value of an Annuity of 1 () Payments 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 .96154 195238 94340 .93458 .92593 .91743 .90909 86957 .90090 89286 2 1.85941 1.83339 1.80802 1.78326 1.73554 1.71252 1.69005 1.88609 2.77509 1.75911 2.53130 3 2.72325 2.67301 2.62432 2.57710 2.48685 2.40183 3.03735 1.62571 2.28323 2.85498 4 3.62990 3.54595 3.46511 3.38721 3.23972 2.44371 3.10245 3.69590 3.16986 3.31213 3.99271 5 4.45182 4.32948 4.21236 4.10020 3.88965 3.79079 3.60478 3.35216 6 5.24214 5.07569 4.76654 4.48592 4.35526 4.23054 4.11141 3.78448 4.91732 5.58238 4.62288 5.20637 7 6.00205 5.38929 5.03295 4.71220 4.56376 4.16042 5.78637 6.46321 4.86842 5.33493 8 6.20979 6.73274 5.97130 5.53482 5.14612 4.96764 4.48732 5.74664 6.24689 9 7.43533 5.99525 5.75902 5.53705 7.10782 7.72173 6.80169 7.36009 6.51523 7.02358 5.32825 5.65022 4.77158 5.01877 10 8.11090 6.71008 6.41766 6.14457 5.88923 11 7.88687 7.49867 7.13896 6.49506 6.20652 5.93770 8.76048 9.38507 8.30641 8.86325 6.80519 7.16073 5.23371 5.42062 8.38384 12 7,53608 6.49236 6.81369 6.19437 7.94269 8.35765 13 9.98565 9.39357 8.85268 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 14 10.56312 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 15 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 16 11.65230 10.83777 10.10590 9.44665 8.31256 7.82371 7.37916 5.95424 6,97399 8.85137 9.12164 11.27407 10.47726 02155 7.54879 6.04716 17 18 12.16567 12.65930 9.76322 10.05909 8.54363 8.75563 9.37189 8,20141 7.70162 7.11963 7.24967 7.36578 10.82760 11.15812 6.12797 6.19823 19 11.68959 12.08532 12.46221 9.60360 8.36492 13.13394 13.59033 7.83929 10.33560 10.59401 8.95012 9.12855 20 11.46992 9.81815 8.51356 6.25933 7.96333 7.46944

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

Auditing

Authors: Timothy J. Ph.D. Robertson, Jack C.; Louwers

9th Edition

0072906952, 9780072906950

More Books

Students also viewed these Accounting questions