Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Vaughn 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
Vaughn 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 B Machine A $75,500 Original cost $190,000 Estimated life 8 years 8 years Salvage value o 0 Estimated annual cash inflows $19,600 $40,000 Estimated annual cash outflows $4,990 $9,970 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 elther a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to decimal places eg. 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

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Students also viewed these Accounting questions

Question

What strategies are there for changing habitual behaviour?

Answered: 1 week ago