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:

$\backslash$table$[[,,,],[,$Machine A$,,$Machine B$],[$Original cost$,$$$113,250,$$$270,000,],[$Estimated life,$10$ years,$10$ years,$],[$Salvage value,$-0-,-0-,],[$Estimated annual cash inflows $$30,000,$$$60,000,,],[$Estimated annual cash outflows,$$7,500,$$$15,000,]]$

Instructions

$($a$)$ Calculate the net present value and profitability index of each machine. Assume an $8\%$ discount rate. Which machine should be purchased?

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

$\backslash$table$[[,$Machine C$],[$Original cost$,$$$250,000$