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Chapter 24-Homework Help Save & Exit Submit Check my work Interstate Manufacturing is considering either replacing one of its old machines with a new machine or having the old machine overhauled. Information about the two alternatives follows. Management requires a 10% rate of return on its investments. (PV of $1. FV of $1. PVA of $1. and FVA of S1) (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. If the old machine is overhauled, it will be kept for another five years and then sold for its salvage value. Cost of old machine Cost of overhaul Annual expected revenues generated Annual cash operating costs after overhaul Salvage value of old machine in 5 years $109,000 150.000 95,000 51,000 19.000 Alternative 2: Sell the old machine and buy a new one. The new machine is more efficient and will yield substantial operating cost savings with more product being produced and sold. Cost of new machine Salvage value of old machine now Annual expected revenues generated Annual cash operating costs Salvage value of new machine in 5 years $305,000 38,000 109,000 31,000 6,000 Required: Chapter 24-Homework Help Save & Exit Submit Check my work 12 Required: 1. Determine the net present value of alternative 1. points Initial cash investment (net) Chart values are based on: eBook Print Year Subsequent Cash inflow (outflow) * Table factor - Present Value References 2. Determine the net present value of alternative 2. Initial cash investment (net) Subsequent Cash ..... Chapter 24-Homework Saved Help Save & Exit Submit Check my work Year x Table factor Present Value inflow (outflow) points 5 eBook Print References 2. Determine the net present value of alternative 2. Initial cash investment (net) Year Subsequent Cash inflow (outflow) x Table factor - Present Value 2 5 Now Chapter 24-Homework Saved Help Save & Exit Submit Check my work 2. Determine the net present value of alternative 2. Initial cash investment (net) points Year Subsequent Cash inflow (outflow) x Table factor - Present Value eBook Print 2 References 5 Now Which alternative should management select