Angler Corp. is considering purchasing one of two new processing machines. Either machine would make it possible for the company to produce its products more efficiently than it is currently equipped to do. Estimates regarding each machine are provided below:

Machine A Machine B

Original cost$ 113,900 $270,900

Estimated life 10 years 10 years

Salvage value -0- -0-

Estimated annual cash inflows $30,300 $59,400

Estimated annual cash outflows $7,500 $14,900

Calculate the net present value and profitability index of each machine. Assume an8% discount rate.

Which machine should be purchased?

Angler Corp. should purchase_______

Angler Corp. did some further research and found one other possible machine that would produce the same type of production efficiencies. The information regarding Machine C is below:

Machine C

Original cost$253,500

Estimated life10 years

Salvage value$30,100

Estimated annual cash inflows$45,500

Estimated annual cash outflows$10,100

Calculate the net present value and profitability index for Machine C. Use an8% discount rate.