Posle Format B 1 ' ' A ' = = = = = Merge & Center | 152 x fx 1 E24-4 Compute net present value and profitability index 2 BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would 3 make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates 4 regarding each machine are provided below. Machine A Machine B Original cost $75,500 $180,000 Estimated life 8 years 8 years Salvage value -0- -O- Estimated annual cash inflows $20,000 $40,000 Estimated annual cash outflows $5,000 $10,000 12 Instructions 13 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. 14 Which machine should be purchased? 15 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". Machine A Present Value Cash Flows Value Value Present value of net annual cash flows Present value of salvage value 9% Discount Factor 5.53482 0.50187 X X X ? Value Less: Capital investment Net present value Profitability Index = ? Value Value Machine B Present Value X 9% Discount Factor 5.53482 0.50187 Cash Flows Value Value Present value of net annual cash flows Present value of salvage value X Value Capital investment Net present value Profitability Index = Value Value - Response