TLC 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 Original cost $78,300 $190,100 Estimated life 8 years 8 Years Salvage value 0 0 Estimated annual cash inflows $24,700 $ 39,900 Estimated annual cash outflows $5,150 $9,000 1. Calculate the net present value and profitability index of each machine A & B. Assume a 10% discount rate.
TLC 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 Original cost $78,300 $190,100 Estimated life 8 years 8 Years Salvage value 0 0 Estimated annual cash inflows $24,700 $ 39,900 Estimated annual cash outflows $5,150 $9,000 1. Calculate the net present value and profitability index of each machine A & B. Assume a 10% discount rate.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 18P: Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting...
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TLC 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 | ||||
---|---|---|---|---|---|
Original cost | $78,300 | $190,100 | |||
Estimated life | 8 years | 8 Years | |||
Salvage value | 0 | 0 | |||
Estimated annual |
$24,700 | $ 39,900 | |||
Estimated annual |
$5,150 | $9,000 |
1. Calculate the
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