Crane Corp. is considering purchasing one of two new processing machines. Either machine would make it possible for the company to produce its products more efficiently than it is currently equipped to do. Estimates regarding each machine are provided below:     Machine A   Machine B Original cost   $113,900   $278,300 Estimated life   10 years   10 years Salvage value   -0-   -0- Estimated annual cash inflows   $29,700   $60,100 Estimated annual cash outflows   $7,600   $14,800 Calculate the net present value and profitability index of each machine. Assume an 8% discount rate. Machine A   Machine B                     Net present value top row, profitability index bottom row   Which machine should be purchased? Crane Corp. should purchase select a machine

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Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers Working capital required Annual net cash receipts Cost to construct new roads in three years Salvage value of equipment in four years $ 430,000 $ 215,000 $ 150,000* $ 63,000 $ 88,000 "Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 18%. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted? Answer is complete but not entirely correct. Complete…

Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area:           Cost of new equipment and timbers $ 275,000   Working capital required $ 100,000   Annual net cash receipts $ 120,000 * Cost to construct new roads in year three $ 40,000   Salvage value of equipment in four years $ 65,000     *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth.   The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company’s required rate of return is 20%.   Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.…