Exercise 24-4 Partially correct answer. Your answer is partially correct. Try again. 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 $76,900 $186,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,600 $39,800 Estimated annual cash outflows $5,150 $10,080 Click here to view PV table. 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 eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A Machine B Net present value Entry field with incorrect answer Entry field with incorrect answer Profitability index Entry field with incorrect answer Entry field with incorrect answer Which machine should be purchased?
Net annual cash inflow = Cash inflow - Cash outflow
Machine A = $19,600-5,150 = $14,450
Machine B = $39,800-10,080 = $29,720
Net present value = Present value of cash inflow - initial investment
Machine A = [$14,450*5.53482 (PVF@9%,8 years)] $79,978 - 76,900 = $3,078
Machine B = $29,720*5.53482 = $164,495 - 186,000 = -$21,505
Profitability index = Present value of cash flow / initial investment
Machine A = $79,978 / 76,900 = 1.04
Machine B = $164,495 / 186,000 = 0.88
As per above results, Machine A should be purchased.
Exercise 24-4 Partially correct answer. Your answer is partially correct. Try again. BAK Corp. is considering...
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 $76,900 $186,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,600 $39,800 Estimated annual cash outflows $5,150 $10,080 Calculate the net present value and profitability index of each machine. Assume...
Your answer is partially correct. Try again. 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 $74,500 $183,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $20,300 $40,200 Estimated annual cash outflows $5,100 $9,810 Click here to view PV...
Question 3 /2 View Policies Current Attempt in Progress 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 $76,900 $186,000 Estimated life 8 years 8 years Salvage value $39,800 Estimated annual cash inflows $19,600 Estimated annual cash outflows $5.150 $10,080 Click here to view PV...
Exercise 24-4 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 B Machine A Original cost $78,000 $184,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,800 $40,300 $10,160 Estimated annual cash outflows $4,820 Click here to view PV table. Calculate the net present...
Blue 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 $76,900 $186,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,600 $39,800 Estimated annual cash outflows $5,150 $10,080 Click here to view PV table. Calculate the net present value and...
Exercise 24-4 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 $77.500 116,000 Estimated life 8 years 8 years Salvage value Estimated annual cash inflows $19,500 $39,600 Estimated annual cash outflows $5,040 $9,800 Click here to view PV table. Calculate the net present value and...
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 $76,600 8 years Machine B $190,000 8 years Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows $20,000 $5,140 $40,500 $10,100 Calculate the net present value and profitability index of each machine. Assume a 9%...
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 B $181,000 8 years Machine A Original cost $77,700 Estimated life 8 years Salvage value Estimated annual cash inflows $20,500 Estimated annual cash outflows $5,070 $40,400 $10,000 Click here to view PV table. Calculate the net present value and profitability index...
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 B $184,000 8 years Machine A Original cost $78,000 Estimated life 8 years Salvage value Estimated annual cash inflows $19,800 Estimated annual cash outflows $4,820 $40,300 $10,160 Click here to view PV table. Calculate the net present value and profitability index...
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 $76,700 $183,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $20,200 $40,500 Estimated annual cash outflows $5,040 $9,870 Click here to view PV table. Calculate the net present value and...