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25-6 Please help with the calculations a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life
25-6 Please help with the calculations
a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $265,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $27,400 b. A machine costs $560,000, has a $23,300 salvage value, is expected to last eight years, and will generate an after-tax income of $68,000 per year after straight-line depreciation Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1 and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below. Required ARequired B A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $265,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $27,400. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount X PV Factor Present Value Annual cash flow Present Value of an Annuity of 1 Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Required A Required B a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $265,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $27,400. b. A machine costs $560,000, has a $23,300 salvage value, is expected to last eight years, and will generate an after-tax income of $68,000 per year after straight-line depreciation Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1 and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below Required ARequired B A machine costs $560,000, has a $23,300 salvage value, is expected to last eight years, and will generate an after-tax income of $68,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Present Value of an Annuity of 1 Present Value of1 Amount x PV Factor Present Value Annual cash flow 0 Residual value Present value of cash inflows Immediate cash outflows Net present value K Required A Required BStep by Step Solution
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