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What is the Profitability Index of Machine A

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Question - A company is considering the replacement of its old, fully depreciated sanding machine. Machine A which has a cost of $63,271.00, a 5-year expected life, and after-tax cash flows (labor savings and depreciation) of $80,000.00 per year. Assume that Wilkins's cost of capital is 16.0%. What is the Profitability Index (PI) of Machine A?

Reference no: EM133046445

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