Waterway Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Waterway 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 is not equipped to do. Estimates for each machine are as follows: Machine A Machine B $77,500 Original cost Estimated life $190,100 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $22,300 Estimated annual cash outflows $4,900 $40,300 $8,950 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 10% discount rate. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. Round profitability index answers to 3 decimal places, e.g. 12.521.) Machine A Net present value Profitability index Machine B 0.88 Waterway 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 is not equipped to do. Estimates for each machine are as follows: Machine A Machine B $77,500 Original cost Estimated life $190,100 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $22,300 Estimated annual cash outflows $4,900 $40,300 $8,950 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 10% discount rate. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. Round profitability index answers to 3 decimal places, e.g. 12.521.) Machine A Net present value Profitability index Machine B 0.88
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Knoko Systems is considering a capital budgeting project with a life of five years that requires an outlay of $90,000. It has free cash flows each period as shown in the following distribution:...
-
In many large business organizations today, it is common that the financial experts are physically located separately from operational personnel. One effect of this isolation is that the people with...
-
The adjustments columns of the worksheet for Becker Company are shown below. Instructions (a) Prepare the adjusting entries. (b) Assuming the adjusted trial balance amount for each account is normal...
-
Under U.S. GAAP, research and development costs are expensed as incurred; however, in the natural resource industry, the cost of finding and developing natural resources may be capitalized to the...
-
Refer to the Lufthansa example on asset depreciation estimates. What adjustments would be required if Lufthansas aircraft depreciation were computed using an average life of 25 years and salvage...
-
You have an opportunity to invest $50,000 now in return for $60,500 in one year. If your cost of capital is 7.6%, what is the NPV of this investment? The NPV will be $ (Round to the nearest cent.)
-
An investment pays $500 at the end of each month for four years and then a lump sum payment of $150,000 at the end of four years. The quoted annual discount rate is 6%. What is the PV of this...
-
When Bruce Reid was hired as Blake Memorial Hospitals new CEO, the mandate had been clear: improve the quality of care, and set the financial house in order. As Reid struggled to finalize his budget...
-
Equivalent Units: Weighted Average Method The following data are for four independent process-costing departments. Inputs are added continuously. A B C D Beginning inventory 4,000 4,000 41,000...
-
A company has its share currently selling at $16.02 and pays dividends annually. The company is expected to grow at a constant rate of 3 percent pa.. If the appropriate discount rate is 16 percent...
-
Company Express S. A . asks you to construct cash flows for following three (3) investment projects, containing following information: PROJECT 1 a. Sales (in ThCh$): - Year 1: 90,000 - Year 2: 55,000...
-
According to CDC estimates, more than 2.8million people in the United States are sickened each year with antibioticresistant infections, with at least 35,000 dying as a result. Antibiotic resistance...
-
(1 point) Consider the intersection of the plane 5x + 6x2 + 3x3 = 3 with the Riemann sphere. Does this curve correspond to a line (L), or a circle (C) in the complex plane? Answer with "L" or "C"....
-
Draw two scatterplots, one for which r = 1 and a second for which r = 21.
-
When is \(\mathrm{J}_{\mathrm{A}}=\mathrm{N}_{\mathrm{A}}\), and when are they not equal?
-
You design a new type of absorber that has a number of slanted plates with falling films on each plate and gas flowing counter to the liquid. In the laboratory, the new system works well. Its high...
-
Is it a good idea for a board to use application forms as a recruitment method?
Study smarter with the SolutionInn App