Question: BAK Corp. is considering pu rchasing one of two new diagnostic machines. Either machine wou ld make it passible for the company to bid


BAK Corp. is considering pu rchasing one of two new diagnostic machines. Either machine wou ld make it passible for the company to bid on jobs thet it currently isr{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. Machine A 378,300 8 years 319,700 ss,040 Machine B $185,000 8 years $39,900 $9,850 Calculate the net present value and profitability index of each machine. Assume a discount rate. (Ifthe net value is r.tive eittr a nqative sign preceding the number eg -45 Or mrentheses eg (45). Round answer for present value to O decimal places, e.g. 125 and pmfitabi/ity to 2 decimal places, e.g. 1050. For calculation nirmses, 5 decirml places as displayd in the table provided.) Machine A Net present value Profitability index Which machine should be purchased? v should be purchased. Machine B
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
