a. A new operating system for an existing machine is expected to cost $548,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $20,000. b. A machine costs $400,000, has a $24,000 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. 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.) 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 $548,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $20,000. (Round your answers to the nearest whole dollar.) Cash Flow Annual cash flow Residual value $ Amount x PV Factor = Present Value 548,000 x 0 10 Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Required A Required B > a. A new operating system for an existing machine is expected to cost $548,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $20,000. b. A machine costs $400,000, has a $24,000 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. 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.) Complete this question by entering your answers in the tabs below. Required A Required B A machine costs $400,000, has a $24,000 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Amount PV Factor = Present Value Cash Flow Annual cash flow Residual value S Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Required A Required B a. A new operating system for an existing machine is expected to cost $548,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $20,000. b. A machine costs $400,000, has a $24,000 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. 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.) Complete this question by entering your answers in the tabs below. Required A Required B A machine costs $400,000, has a $24,000 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Amount PV Factor = Present Value Cash Flow Annual cash flow Residual value S Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Required A Required B
