Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $837,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $105,000 b. A machine costs $570,000, has a $58,000 salvage value, is expected to last eight years, and will generate an after-tax income of $155,000 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 $837,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $105,000. (Round your answers to the nearest whole dollar) Select Chart Amount Cash Flow Annual cash flow * PV Factor = Present Value $ 0 Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment PV 51. El of S1. PVA 951, and EVA 051) (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 $837,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $105,000. (Round your answers to the nearest whole dollar) Select Chart Amount Cash Flow Annual cash flow Residual value * PV Factor - Present Value 0 0 Net present value Required > Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investmen (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 Reafired B A machine costs $570,000, has a $58,000 salvage value, is expected to last eight years, and will generate an after-tax income of $155,000 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 $ 0 Residual value 0 Net present value
