Question
Sweet Acacia Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs
Sweet Acacia 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 is not equipped to do. Estimates for each machine are as follows:
| Machine A | Machine B | ||||
|---|---|---|---|---|---|
| Original cost | $78,500 | $190,100 | |||
| Estimated life | 8 years | 8 years | |||
| Salvage value | 0 | 0 | |||
| Estimated annual cash inflows | $22,200 | $39,900 | |||
| Estimated annual cash outflows | $4,900 | $8,850 | |||
Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 10% discount rate.
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Auditing A Modern Approach
Authors: Sanjay Basotia
1st Edition
938092903X, 978-9380929033
