Calculate the net present value and profitability index of

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

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