5. 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.)

A new operating system for an existing machine is expected to cost $530,000 and have a useful life of six years. The system yields an incremental after-tax income of $200,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $23,400. (Round your answers to the nearest whole dollar.)

Cash Flow	Select Chart	Amount	x	PV Factor	=	Present Value
Annual cash flow					=
Residual value					=
	Net present value

A machine costs $520,000, has a $23,300 salvage value, is expected to last eight years, and will generate an after-tax income of $78,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.)

Cash Flow	Select Chart	Amount	x	PV Factor	=	Present Value
Annual cash flow					=
Residual value					=
	Net present value