a. A new operating system for an existing machine is expected to cost $599,000 and have a useful life of six years. The system yields an incremental after-tax income of $175,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $35,000 b. A machine costs $430,000, has a $30,000 salvage value, is expected to last eight years, and will generate an after-tax income of $85,000 per year after straight-line depreciation Assume the company requires a 11% 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 $599,000 and have a useful life of six years. The system yields an incremental after-tax income of $175,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $35,000. (Round your answers to the nearest whole dollar) Cash Flow Annual cash flow Residual value Amount $ 269 000 $ 35,000 Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Immediate cash outflows Nat Rent al * PV Factor - Present Value 4.2305 = $ 1.138,005 0.5346 18,711 $ 1.156,716 599,000 $ 557 7161 Beyer Company is considering the purchase of an asset for $250,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 15% return on its investments (PV of $1. FV of $1. PVA of $1. and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 $67,000 Year 2 $51,600 Year 3 $87,000 Year 4 $137,000 Year 5 $37,000 Total $379,000 Net cash flows a. Compute the nel present value of this investment b. Should Beyer accept the investment? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your answers to the nearest whole dollar) Present Present Value Net Cash Year Value of 1 of Net Cash Flows at 15% Flows $ 6,700 0.86965 58,261 2 5,100 0.7561 38 563 3 87.000 0.6575 57 204 Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your answers to the neares Year Net Cash Flows 1 $ N 3 6,700 5,100 87,000 137,000 37,000 272,800 Present Present Value Value of 1 of Net Cash at 15% Flows 0.8696 $ 58,261 0.7561 38,563 0.6575 57,204 0.5718 78,330 0.4972 18,396 $ 250,754 250,000 754 4 5 $ Totals $ Amount invested Net present value $ Reguito Required B >
