Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Machine A $75,500 8 years 0 $20,000 $5,000 Machine B $180,000 8 years. 0 $40,000 $10,000 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is (46) D

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here.
Machine A
$75,500
8 years
Original cost
Estimated life
Salvage value
Estimated annual cash inflows
Estimated annual cash outflows
Click here to view the factor table.
Net present value
Profitability index
0
$20,000
$5,000
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
706
Machine B
$180,000
8 years
0
89
$40,000
$10,000
Machine B
161642.40
1.04
Transcribed Image Text:bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Machine A $75,500 8 years Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Net present value Profitability index 0 $20,000 $5,000 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 706 Machine B $180,000 8 years 0 89 $40,000 $10,000 Machine B 161642.40 1.04
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