a. A new operating system for an existing machine is expected to cost $565,000 and have a useful life of six years. The system ylelds an incremental after-tax Income of $165.000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $25,000. b. A machine costs $410,000, has a $26,000 salvage value, is expected to last eight years, and will generate an after-tax Income of $75,000 per year after straight-line depreciation. Assume the company requires a 13% 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.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B A new operating system for an existing machine is expected to cost $565,000 and have a useful life of six years. The system yields an incremental after-tax income of $165,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $25,000. (Round your answers to the nearest whole dollar.) Amount Cash Flow Annual cash flow Residual value $ $ 255.000 x 25.000X PV Factor 3.9980 X 0.4803 Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Present Value $ 1.019.490 12,008 $ 1,031.498 (565,000) 468.498 Required A Required B > a. A new operating system for an existing machine is expected to cost $565,000 and have a useful life of six years. The system yields an Incremental after-tax Income of $165.000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $25,000. b. A machine costs $410.000, has a $26.000 salvage value is expected to last eight years, and will generate an after-tax Income of $75,000 per year after straight-line depreciation Assume the company requires a 13% 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.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B = A machine costs $410,000, has a $25,000 salvage value, is expected to last eight years, and will generate an after-tax income of $75,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) PV Present Cash Flow Select Chart Amount Factor Value Annual cash flow Present Value of an Annuity of 1 $ 123.000X 4.7990 X = 590,277 Residual value Present Value of 1 $ 28.000 0.3780 X = 9.776 Present value of cash inflows $ 600,053 Immediate cash outflows (410,000) Net present value $ 190.053 X O
