BAK Corp 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 Machine A Machine B Original cost $76,000 $183,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $20,000 $39,600 Estimated annual cash outflows $5,140 $10,090 Calculate the net present value and profitability index of each machine Assume a 9 discount rate (If the net present value is negative, use either a negative sign preceding the number or parentheses) Which machine should be purchased

Question: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that

BAK Corp. 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.

	Machine A	Machine B
Original cost	$76,000	$183,000
Estimated life	8 years	8 years
Salvage value	0	0
Estimated annual cash inflows	$20,000	$39,600
Estimated annual cash outflows	$5,140	$10,090

Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number or parentheses).

Which machine should be purchased?

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