1. A new operating system for an existing machine is expected to cost $760,000 and have a useful life of six years. The system yields an incremental after-tax income of $270,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $24,400.
2. A machine costs $460,000, has a $30,800 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 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.)

Required A Required B A new operating system for an existing machine is expected to cost $760,000 and have a useful life of six years. The systei yields an incremental after-tax income of $270,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $24,400. (Round your answers to the nearest whole dollar.) Cash Flow Amount * PV Factor = Present Value Annual cash flow Residual value Select Chart Present Value of an Annuity of 1 Present Value of 1 Present value of cash inflows Present value of cash inflows Net present value Required A Required B > Required A Required B A machine costs $460,000, has a $30,800 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount x PV Factor = Present Value Annual cash flow Residual value Net present value