Sheffield Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the companyto bid 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 outflowsMachine A$74,6008 years0$20,400$5,130Machine B$182,0008 years0$39.900$9,880 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, eg. 125 andprofitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided)Net present valueProfitability indexMachine AWhich machine should be purchased?should be purchased.Machine B

Time value of money :— According to this concept, value of money in present day is greater than the…

Sheffield 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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Machine A $74,600 8 years 0 $20,400 $5,130 Machine B $182,000 8 years 0 $39.900 $9,880

Sheffield 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. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Machine A $74,600 8 years 0 $20,400 $5,130 Machine B $182,000 8 years 0 $39.900 $9,880

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 7EB: An auto repair company needs a new machine that will check for defective sensors. The machine has an...

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