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

Accounting

Question - SRB 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 $77,810 $190,000

Estimated life 8 years 8 years

Salvage value 0 0

Estimated annual cash inflows $19,930 $40,270

Estimated annual cash outflows $4,820 $8,850

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

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