WileyPLUS Problem 13-2 Karendo Corporation is considering purchasing another machine for its manufacturing operations. The machine would cost $421,860. It would have an estimated life of five years with no salvage value. The company estimates that annual cash inflows would increase by $209,000 and that annual cash outflows would increase by $90,500. Calculate the cash payback period. (Round answer to 2 decimal places, e.g. 15.25.) Cash payback period years WileyPLUS Problem 13-3 Aliara Corporation is considering purchasing one of two new machines. Estimates for each machine are as follows: Investment Estimated life Estimated annual cash inflows Estimated annual cash outflows Machine A $108,600 10 years $26,700 $6,200 Machine B $155,800 10 years $39,100 $9,900 Salvage value for each machine is estimated to be zero. Click here to view PV table. Calculate the net present value of each project assuming a 6% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.) Net Present Value Machine A $ Machine B $ Which project should the company choose? Exercise 13.16 TLC 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 $77,800 $190,300 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $23,500 $39,500 Estimated annual cash outflows $5,200 $8,850 Click here to view PV table. Calculate the net present value and profitability index of each machine. Assume a 10% discount rate. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Round profitability index answers to 3 decimal places, e.g. 12.521.) ne A ne B Net present value $ $ Profitability index Which machine should be purchased? Problem 13.26A K&G Company currently sells 1.05 million units per year of a product to one customer at a price of $3.30 per unit. The customer requires that the product be exclusive and expects no increase in sales during the five-year contract. The company manufactures the product with a machine that it purchased seven years ago at a cost of $712,000. Currently, the machine has a book value of $430,000 but the market value is only $233,000. The machine is expected to last another five years, after which it will have no salvage value. Last year, the production variable costs per unit were as follows: Direct materials Direct labour Variable overhead Total variable cost per unit $1.50 0.60 0.30 $2.40 The company president is considering replacing the old machine with a new one that would cost $818,000. The new machine is expected to last five years. At the end of that period, the salvage value will be $341,000. The president expects to save 5% of the company's total variable costs with the new machine. Assume that the company's desired rate of return is 12%. Calculate the net present value of the investment. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answer to o decimal places, e.g. 5,275.) Click here to view PV table. Net present value Using the net present value method, should the company replace the old machine with the new one? The president replace the equipment based on a net present value