BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Machine A $76,600 8 years 0 $19,900 $4,890 Machine B $179,000 8 years 0 $40,400 $9,940 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative,
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Machine A $76,600 8 years 0 $19,900 $4,890 Machine B $179,000 8 years 0 $40,400 $9,940 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative,
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 2CE
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