Calculate the net present value and profitability index of

Assignment Help Accounting Basics

Reference no: EM13599067

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 isn't equipped to do. Estimates regarding each machine are provided below.
Machine A Machine B

Original cost $78,380 $190,300
Estimated life 8 years 8 years
Salvage value 0 0
Estimated annual cash inflows $20,310 $39,640
Estimated annual cash outflows $5,160 $8,950

Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round computations for 9% Discount Factor to 5 decimal places)
Machine A

Net present value $?
Profitability index ?

Machine B

Net present value $?
Profitability index ?

Which machine should be purchased?

Reference no: EM13599067

Questions Cloud

During 2010 maverick inc became involved in a tax dispute : during 2010 maverick inc. became involved in a tax dispute with the irs. mavericks attorneys have indicated that they

The ledger of hixson company at the end of the current : the ledger of hixson company at the end of the current year shows accounts receivable 120000 sales 840000 and sales

A newly created design business called smart art is just : a newly created design business called smart art is just finishing up its first year of operations. during the year

On december 1 2009 lakeview company collected rent of 3600 : on december 1 2009 lakeview company collected rent of 3600 for office space rented to another business. the rent

Calculate the net present value and profitability index of : tlc corp. is considering purchasing one of two new diagnostic machines. either machine would make it possible for the

Assume that the credit memorandum was received prior to : details of a purchase invoice and related credit memorandum are summarized as followsinvoice cost of merchandise listed

What is the unit product cost for the month under variable : maffei company which has only one product has provided the following data concerning its most recent month of

Maui inc is deciding on the price for a new product the : maui inc. is deciding on the price for a new product. the company uses cost-plus pricing based on target return on

Getty company manufactures a product that has a variable : getty company manufactures a product that has a variable cost of 50 per unit. fixed costs total 1000000 and are

User Account

All Pages