Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $616,000 and have a useful life of six years. The system yle an incremental after-tax income of $180,000 each year after deducting its straight-line depreciation. The predicted salvage value the system is $40,000 b. A machine costs $440,000, has a $32,000 salvage value, is expected to last eight years, and will generate an after-tax income o $90,000 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 PY 01.$1. FV of $1. PVA of S1, and FVA 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 new operating system for an existing machine is expected to cost $616,000 and have a useful life of six years. The system yields an incremental after-tax income of $180,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $40,000. (Round your answers to the nearest whole dollar.) Cash Flow * PV Factor Annual cash flow Residual value Select Chart Amount Present Value $ 0 0 Net present value Required B Complete this question by entering your answers in the tabs below. Print Required A Required B References A new operating system for an existing machine is expected to cost $616,000 and have a useful life of six years. The system vields an incremental after-tax income of $180,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $40,000. (Round your answers to the nearest whole dollar) Cash Flow X PV Factor - Present Value Select Chart Amount Annual cash flow $ 0 Residual value 0 Future Value of 1 Future Value of an Annuity of 1 Present Value of 1 Required B > Present Value of an Annuity of 1 Requires A new operating system for an existing machine is expected to cost $616,000 and have a useful life of six years. The system vields an incremental after-tax income of $180,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $40,000. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount * PV Factor Present Value Annual cash flow $ 0 Residual value 0 Immediate cash outflows Net present value Present value of cash inflows Complete this question by answers Required A Required B A machine costs $440,000, has a $32,000 salvage value, is expected to last eight years, and will generate an after-tax income of $90,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) * PV Factor Annual cash flow Residual value Cash Flow Select Chart Amount Present Value = $ 0 0 Net present value
