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		$112,700		$267,900
Estimated life		10 years		10 years
Salvage value		-0-		-0-
Estimated annual cash inflows		$30,000		$59,800
Estimated annual cash outflows		$7,400		$15,000

Calculate the net present value and profitability index of each machine. Assume an 8% discount rate.

		Machine A		Machine B
Net present value		$		$
Profitability index

Which machine should be purchased?

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		$250,000
Estimated life		10 years
Salvage value		$30000
Estimated annual cash inflows		$45,000
Estimated annual cash outflows		$10,000

Calculate the net present value and profitability index for Machine C. Use an 8% discount rate.

Rank the investments based on net present value.

Which machine would be chosen based on this calculation?

Rank the investments based on the profitability index.

Which machine would be chosen based on this calculation?

Which machine should be purchased based on all the information provided? Discuss your reasons why.