question_answer Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…A: The net present value and the profitability index are the methods of finding the profitability of a…


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
Estimated annual cash inflows
$20,300
$40,200
Estimated annual cash outflows
$5,100
$9,810
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 O 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
Profitability index
Which machine should be purchased?
v should be purchased.
expand button
Transcribed Image Text: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
Estimated annual cash inflows
$20,300
$40,200
Estimated annual cash outflows
$5,100
$9,810
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 O 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
Profitability index
Which machine should be purchased?
v should be purchased.
question_answer Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…A: The net present value and the profitability index are the methods of finding the profitability of a…


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
Estimated annual cash inflows
$20,300
$40,200
Estimated annual cash outflows
$5,100
$9,810
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 O 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
Profitability index
Which machine should be purchased?
v should be purchased.
expand button
Transcribed Image Text: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
Estimated annual cash inflows
$20,300
$40,200
Estimated annual cash outflows
$5,100
$9,810
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 O 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
Profitability index
Which machine should be purchased?
v should be purchased.

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