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Capital Budgeting Exercise Bailey Corporation is considering purchasing one of two new processing machines. Ether machine would make it possible for the company to produce it it is currently equipped to do. Estimates regarding each machine are provided below: Machine A MachineB $113,250 $270,000 10 years Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows 10 years $30,000 7,500 $60,000 $15,000 Instructions Calculate the net present value and profitability index of each machine. Assume an 8% discount rate. Which machine should be purchased? Bailey Corporation did some further research and found one other possible machine that would produce the same type of production efficiencies. The information regarding Machine C is below: Machine C $250,000 100% Original cost Capital Budgeting Exercise Bailey Corporation is considering purchasing one of two new processing machines. Ether machine would make it possible for the company to produce it it is currently equipped to do. Estimates regarding each machine are provided below: Machine A MachineB $113,250 $270,000 10 years Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows 10 years $30,000 7,500 $60,000 $15,000 Instructions Calculate the net present value and profitability index of each machine. Assume an 8% discount rate. Which machine should be purchased? Bailey Corporation did some further research and found one other possible machine that would produce the same type of production efficiencies. The information regarding Machine C is below: Machine C $250,000 100% Original cost

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