Don'y know where to start?! No teacher?
A: -78,190 + 14450*8: -78190 + 14450[1 - 1/(1.09)^8] / .09 = -78190 + 79978 = 1,788
B: - 190200 + 31500*8: -190200 + 31500[1 - 1/(1.09)^8] / .09 = -190200 + 174347 = -15,853
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.
Calculate the net present value and profitability index of each machine. Assume a 9% discount rate
Machine A Machine B Original cost $78,190 $190,200 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,640 $40,360 Estimated annual cash outflows $5,190 $8,860
achine A
Machine B
Net present value $ Profitability index
Net present value $ Profitability index
Any tips on how to do this? I dont know where to start.