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Calculate the profitability index assuming discount rate

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Reference no: EM132793963

Tailor Corp. is considering purchasing one of two new diagnostic machines. The following estimated data has been determined by management:

                                   Machine 1                Machine 2

Initial cost                $41,000                   $50,550

Estimated life                5 years                    5 years

Salvage value             $1,180                        $1,450

Estimated annual cash inflows   $15,150                $19,900

Estimated annual cash outflows     $3,900                 $7,100

Problem 1: Calculate the profitability index assuming a 9% discount rate

Reference no: EM132793963

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