a. A new operating system for an existing machine is expected to cost $769,000 and have a useful life of six years. The system yields an incremental after-tax income of $225,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $85,000 b. A machine costs $530,000, has a $50.000 salvaje value, is expected to last eight years, and will generate an after-tax Income of $135,000 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 S1, and EVA of S1) (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 $530,000, has a $50,000 salvage value, is expected to last eight years, and will generate an after tax income of $135,000 per year after straight line depreciation. (Flound your answers to the nearest whole dollar) X PV Factor - Present Value Cash Flow Annual cash flow Residual value Amount $ 195.000 5 50.000 0 Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value 530,000 a. A new operating system for an existing machine is expected to cost $/69,000 and have a useful life of six years. The system yields an incremental after tax income of $225,000 each year after deducting its straight-line depreciation. The predicted salvage value o the system is $85,000. b. A machine costs $530,000, has a $50,000 salvage value, is expected to last eight years, and will generate an after-tax income of $135,000 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 S1 (Use appropriate foctor(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 $769,000 and have a useful life of six years. The system yields an incremental after-tax income of $225,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $85,000. (Round your answers to the nearest whole dollar) Cash Flow Select Chart Amount x PV Factor Present Value Annual cash flow Present Value of an Annuity of 1 $ 339,000 $ 0 Residual value Present Value of 1 $ 85,000 Present value of cash inflows Immediate cash outflows 769.000 Net present value
