Question: *URGENT HELP NEEDED UPVOTE GUARANTEED* Tailor Corp. is considering purchasing one of two new diagnostic machines. The following estimated data has been determined by management:
*URGENT HELP NEEDED UPVOTE GUARANTEED*
Tailor Corp. is considering purchasing one of two new diagnostic machines. The following estimated data has been determined by management:
| Machine 1 | Machine 2 | ||||||
| Initial cost | $40,950 | $50,800 | |||||
| Estimated life | 5 years | 5 years | |||||
| Salvage value | $1,030 | $1,400 | |||||
| Estimated annual cash inflows | $15,100 | $19,850 | |||||
| Estimated annual cash outflows | $4,100 | $7,000 | |||||
Click here to view PV table. Calculate the profitability index assuming a 5% discount rate. (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answers to 3 decimal places, e.g. 1.251.)
| Profitability Index | ||
| Machine 1 | ||
| Machine 2 |
Based on your answer, which project should the company choose?
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