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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
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. EV of $1. PVA of $1. and EVA 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 $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.) Cash Flow Annual cash flow Residual value Select Chart Net present value Amount x PV Factor Present Value F Requirett A Required B>
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