Paint Pro Corporation is considering purchasing one of two new mixing machines. Either machine would...
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Paint Pro Corporation is considering purchasing one of two new mixing 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. 8 years Machine A Machine B Original Cost $106,000 $175,000 Estimated Useful Life 8 years Annual Cash Flows $30,000 $45,000 Annual cash outflow $10,000 $15,000 Instructions Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. Which machine should be purchased? Note: factor for the present value of an ordinary annuity 8 years @9% = 5.53482
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