User Account

All Pages

Calculate the net present value and profitability index

Assignment Help Accounting Basics
Reference no: EM131822062

Exercise 26-4 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 $75,500   $180,000  
Estimated life 8 years   8 years  
Salvage value 0   0  
Estimated annual cash inflows $20,000   $40,000  
Estimated annual cash outflows $5,000   $10,000  

Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Which machine should be purchased?

Reference no: EM131822062

Questions Cloud

Linear egression analysis several key assumptions : Please list them and then choose one and explain it in detail. Make sure that you choose one that has not been selected before.
Compute taxable income and income taxes payable : Tax-exempt municipal bonds yielded interest of $150,000 in 2013. Compute taxable income and income taxes payable for 2013
Find and graph the probability mass density of x : Let X be the number of heads minus the number of tails. what are the possible values of x? Find and graph the probability mass density of x.
Professionals to recommend the best investment products : It requires certain professionals to recommend "the best" investment products to their clients. What is this standard called?
Calculate the net present value and profitability index : Calculate the net present value and profitability index of each machine. Assume a 9% discount rate
Determine the controlling interest that would appear : Assume that the acquisition took place on April 1. Determine the controlling interest that would appear in a consolidated income statement for this year
The societal issue - final argumentative essay progress : Final Argumentative Essay Progress - Review your classmate post and respond to your peer, response to your classmate -
State the costs and benefits of the exclusionary rule : State the costs and benefits of the exclusionary rule, as well as alternative remedies to the rule. State your position on the exclusionary rule.
Prepare the statement of comprehensive income : Prepare the Statement of Comprehensive Income, Statement of Financial Position, Statement of Capital and Statement of Cash Flows.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd