Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $680,000 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 $19,000. b. A machine costs $470,000, has a $22,100 salvage value, is expected to last eight years, and will generate an after-tax income of $74,000 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.) Required A Required B A new operating system for an existing machine is expected to cost $680,000 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 $19,000. (Round your answers to the nearest whole dollar.) Amount PV Factor Present Value Cash Flow Select Chart Annual cash flow Present Value of an Annuity of 1 Residual value $ 290,167 x $ 0 = 0 Net present value