Please Do not Give image format Indigo Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company tobid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below.Original costEstimated lifeSalvage valueEstimated annual cash inflowsEstimated annual cash outflowsClick here to view PV tables.Net present value $Profitability indexMachine A$220,000ByearsOMachine ACalculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to thenearest whole dollar, eg. 5,275 and profitability index to 2 decimal places, eg 15.25. Enter negative amounts using either a negative signpreceding the number eg -45 or parentheses eg. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided)Machine BWhich machine should be purchased?$72,000$31,000Machine AMachine B$294,0008 years0587.000$36.000

Net present value(NPV) is the difference between present value of all cash inflows and initial…

Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value $ Machine A $220,000 Profitability index 8 years 0 $72,000 $31,000 Machine B $294,000 Click here to view PV tables. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to the nearest whole dollar, eg. 5,275 and profitability index to 2 decimal places, eg 15.25. Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided) Machine A 8 years 0 $87,000 $36,000 Machine B

Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value $ Machine A $220,000 Profitability index 8 years 0 $72,000 $31,000 Machine B $294,000 Click here to view PV tables. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to the nearest whole dollar, eg. 5,275 and profitability index to 2 decimal places, eg 15.25. Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided) Machine A 8 years 0 $87,000 $36,000 Machine B

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1MAD: San Lucas Corporation is considering investment in robotic machinery based upon the following...

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The management of East Manufacturing needs a new high tech sorting machine and has two different proposals under consideration. They require a rate of return of 10% (discount rate) and the Accounting Department has prepared the following information: Initial Investment Useful Life of Equipment Net Annual Cash Flow Salvage Value Investment B: Click to open:↓ Ⓡ Clearly label and show calculations for full credit! No calculations = No credit. 1) Calculate the Payback Period for each option: Investment A: 2) Calculate the Net Present Value of each option: Investment A: $ 3,700,000 7 years $ 900,000 $0 Investment B: A $3,400,000 7 years $800,000 $90,000 B
A firm is considering the purchase of a new machine to increase the output of an existing production process. Of all the machines considered, management has narrowed the field to the machines represented by the following cash flows: Machine Initial cost of machine ($) Annual cash flow from machine ($/year) A 6,500 B 17,000 2,000 3,000 Machine A has a service life of 5 years whereas Machine B has a service life of 10 years. The MARR (minimum acceptable rate of return) is 10%. The values of the net present worth (NPW) of Machine A and Machine B are, respectively: Select one: O $1,190 and $1,639 O $1,082 and $1,434 O $945 and $1,050 O $1,012 and $1,237
The management of Ryland International Is considering Investing in a new facility and the following cash flows are expected to result from the investment: A. What Is the payback period of this uneven cash flow? B. Does your answer change if year 6s cash inflow changes to $920,000?
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