Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $640,000 and have a useful life of six years. The system yields an incremental after-tax income of $280,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $13,800 b. A machine costs $590,000, has a $34,700 salvage value, is expected to last eight years, and will generate an after-tax income of $64,000 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 $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 $640,000 and have a useful life of six years. The system yields an incremental after-tax income of $280,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $13,800. (Round your answers to the nearest whole dollar.) x PV Factor | =| Present Value Cash Flow Annual cash flow Residual value Select Chart Amount Net present value Required A Required B > Required A Required B A machine costs $590,000, has a $34,700 salvage value, is expected to last eight years, and will generate an after-tax income of $64,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Annual cash flow Residual value Select Chart Amount x PV Factor l = Present Value Net present value Required B Required A