EX Algo Profitability Index; Taxes Section
LO
The owner of Atlantic City Confectionary is considering the
purchase of a new semiautomatic candy machine. The machine
will cost $ and last years. The machine is expected to
have no salvage value at the end of its useful life. The owner
projects that the new candy machine will generate $ in
aftertax savings each year during its life including the
depreciation tax shield
Use Appendix A for your reference.
Note: Use appropriate factors from the tables provided.
Required:
Compute the profitability index on the proposed candy
machine, assuming an aftertax hurdle rate of a percent, b
percent, and c percent.
Note: Round your final answers to decimal places.
