Kamal Corporation is considering purchasing one of two new diagnostic machines. Either machine would make it possible
Question:
Kamal Corporation 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.
Requirements
Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. Which machine should be purchased?
Transcribed Image Text:
Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Machine A $ 106,000 8 years 0 $ 30,000 $ 10,000 Machine B $ 175,000 8 years 0 $ 45,000 $ 15,000
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Related Book For
Horngrens Accounting The Managerial Chapters
ISBN: 9781292105871
11th Global Edition
Authors: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
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