(Answered) Question - bak corp is considering purchasing one of two

Accounting

Question - BAK 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	$77,920	$185,900
Estimated life	8 years	8 years
Salvage value	0	0
Estimated annual cash inflows	$20,070	$39,910
Estimated annual cash outflows	$4,910	$9,820

Calculate the net present value and profitability index of each machine. Assume a 9% discount rate

Which machine should be purchased?

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