5 Problem 24-6A (Algo) Net present value of alternate investments LO P3 2 points Skipped eBook Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine Information about the two alternatives follows. Management requires a 12% rate of return on its investments. (PV of $1. EV of $1. PVA of $1, and EVA 051) (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $150,000 and results in $36,000 of net cash flows in each of the next five years. After five years, it can be sold for a $22,000 salvage value Alternative 2: Sell the old machine for $45.000 and buy a new one. The new machine requires an initial investment of $303,000 and can be sold for a $14,000 salvage value in five years. It would yleld cost savings and higher sales, resulting in net cash flows of $46,000 in each of the next five years. Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of alternative 2 3. Which alternative should management select based on net present value? Print References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the net present value of alternative 1. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Present Value of Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of alternative 2. 3. Which alternative should management select based on net present value? Sed Complete this question by entering your answers in the tabs below. bok Required 1 Required 2 Required 3 int ences Determine the net present value of alternative 1. (Do not round intermediate calculations, Round your present value factor to 4 decimals and final answers to the nearest whole dollar) Net Cash Flows Present Value Factors at 12% Present Value of Cash Flows Year 1-5 Salvage value (year 5) Totals Initial investment Net present value Required Required 2 > Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of alternative 2 3. Which alternative should management select based on net present value? Skipped Complete this question by entering your answers in the tabs below. eBook Required Required 2 Required 3 Print References Determine the net present value of alternative 2. (Negative net present values should be indicated with a minus sign. Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole doltar.) Not Cash Present Value Present Value of Flows Factors at 12% Cash Flows Year 1-5 Salvage value-new machine Salvage value-old machine 1.0000 Totus Initial investment Net present value