BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make...
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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 isnt equipped to do. Estimates regarding each machine are provided below.
| Machine A | Machine B | ||||
|---|---|---|---|---|---|
| Original cost | $ 74,100 | $ 183,000 | |||
| Estimated life | 8 years | 8 years | |||
| Salvage value | 0 | 0 | |||
| Estimated annual cash inflows | $ 20,500 | $ 39,500 | |||
| Estimated annual cash outflows | $ 4,850 | $ 10,020 |
What is the NPV and Profitability Index for Machine A and B?
The discount rate is 9%
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