Question: please highlight on your work the numbers i will need to input on my work. so its easier to identify and youll get a thumbs
Exercise 12-4 (also in your book at end of chapter) 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 here: Machine A Machine B Original cost 75,500 180,000 Estimated Life 8 years 8 years Salvage Value -0- -0- Estimated Annual cash IN-flows $20,000 $40,000 Estimated Annual Cash OUT-flows $5,000 $10,000 Instructions Calculate the net present value and profitability index of each machine. (Assume a 9% discount rate). Which machine should be purchased? Cash Flows 9% Discount Factor Present Value $ Machine A Present value of net annual cash flows LESS: Capital Investment Net Present Value Profitability Index (A) = Cash Flows 9% Discount Factor Present Value $ Machine B Present value of net annual cash flows LESS: Capital Investment Net Present Value Profitability Index (B) = =
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