Current Attempt in Progress BAK 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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Net present value Profitability index Machine A Which machine should be purchased? $76,600 8 years should be purchased. 0 $20,000 Machine A $5,140 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 placis, 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 B $190,000 8 years 0 $40,500 $10,100 Machine B
Current Attempt in Progress BAK 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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Net present value Profitability index Machine A Which machine should be purchased? $76,600 8 years should be purchased. 0 $20,000 Machine A $5,140 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 placis, 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 B $190,000 8 years 0 $40,500 $10,100 Machine B
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 1MAD: San Lucas Corporation is considering investment in robotic machinery based upon the following...
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Transcribed Image Text:Current Attempt in Progress
BAK 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.
Original cost
Estimated life
Salvage value
Estimated annual cash inflows
Estimated annual cash outflows
Click here to view the
Net present value
Profitability index
table.
Which machine should be purchased?
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Machine A
$76,600
8 years
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 O 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)
should be purchased.
Machine A
0
$20,000
$5,140
Machine B
$190,000
8 years
0
$40,500
$10,100
Machine B
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