a. A new operating system for an existing machine is expected to cost $616,000 and have a useful life of six years. The system yields an incremental after-tax income of $180,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $40,000. b. A machine costs $440,000, has a $32,000 salvage value, is expected to last eight years, and will generate an after-tax income of $90,000 per year after straight-line depreciation. Assume the company requires a 10% 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 A Required B A new operating system for an existing machine is expected to cost $616,000 and have a useful life of six years. The system yields an incremental after-tax income of $180,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $40,000. (Round your answers to the nearest whole dollar.) Cash Flow Annual cash flow Residual value Select Chart Amount PV Factor = Present Value Present Value of an Annuity of 1 $ 276,000 x 4.3553 $ 1,202,063 Present Value of 1 $ 40,000 x 0.5645= Present value of cash inflows 22,580 $ 1,224,643 Immediate cash outflows (616,000) Net present value < Required A Required B > a. A new operating system for an existing machine is expected to cost $616,000 and have a useful life of six years. The system yields an incremental after-tax income of $180,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $40,000. b. A machine costs $440,000, has a $32,000 salvage value, is expected to last eight years, and will generate an after-tax income of $90,000 per year after straight-line depreciation. Assume the company requires a 10% 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 A Required B A machine costs $440,000, has a $32,000 salvage value, is expected to last eight years, and will generate an after-tax income of $90,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount PV Factor Present Value Annual cash flow Residual value Present Value of an Annuity of 1 $ Present Value of 1 $ 141,000 x 32,000 x 5.3349 = $ 752,221 0.4665= 14,928 Present value of cash inflows $ 767,149 Immediate cash outflows (440,000) Net present value < Required A Required B