Miles, Inc. is considering the purchase of a new machine for $600,000 that has an estimated useful life of 5 years and no salvage value. The machine will generate net annual cash flows of $105,000. It is believed that the new machine will also reduce downtime because of its reliability. Assume the discount is 8%. In order to make the project acceptable, the reduction in downtime must be worth YearPresent value of 1 at 8%Present Value of Annuity 1 at 8%
1.926.926
2.8571.783
3.7942.577
4.7353.312
5.6813.993
A) $45,263 per year
B) $18,264 per year
C) $49,662 per year
D) $23,958 per year

Aplant manager is considering buying additional stamping machines to accommodate increasing demand. the alternatives are to buy 1 machine, 2 machines, or 3 machines. the profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. the payoff table below illustrates the profits realized (in $000's) based on the different scenarios faced by the manager. alternative bid accepted bid rejected buy 1 machine $10 $5 buy 2 machines $30 $4 buy 3 machines $40 $2 refer to the information above. assume that based on historical bids with the defense contractor, the plant manager believes that there is a 65% chance that the bid will be accepted and a 35% chance that the bid will be rejected. what is the expected value under perfect information (evpi)?