Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information about the two alternatives follows. Management requires a 12% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $156,000 and results in $47,000 of net cash flows in each of the next five years. After five years, it can be sold for a $23,000 salvage value. Alternative 2: Sell the old machine for $38,000 and buy a new one. The new machine requires an initial investment of $292,000 and can be sold for a $7,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of $43,000 in each of the next five years. Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of alternative 2. 3. Which alternative should management select based on net present value? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the net present value of alternative 1. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Year 1-5 Salvage value (year 5) Totals Net Cash Flows $ 47,000 23,000 Present Value Present Value of Factors at 12% Cash Flows 3.6003 $ 169,214 0.5674 13,050 182,264 156,000 $ 26,264 Initial investment Net present value Required 1 Required 2 Required 3 Determine the net present value of alternative 2. (Negative net present values should be indicated with a minus sign. Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Net Cash Flows Present Value Factors at 12% Present Value of Cash Flows Year 1-5 $ 43,000 Salvage value-new machine Salvage value old machine 7,000 38,000 1.0000 Totals 0 Initial investment 156,000 Net present value