Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information about the two alternatives follows. Management requies 10% rate of return on its investments. (PV of \$1. EV of \$1. BVA of \$1. and FVA of \$1) (Use oppropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $150,000 and results in $60,000 of net cash flows in each of the next five years. After five years, it can be sold for a $30,000 salvage value. Alternative 2: Sell the old machine for $50,000 and buy a new one. The new machine requires an initial investment of $290,000 and can be sold for a $10,000 salvage value in five years. It would yeld cost savings and higher sales, resulting in net cash flows of $40,000 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 altemative should management select based on net present value? Complete this question by entering your answers in the tabs below. Determine the net prewent vatue of atternative 1. (oo not round incormediate colculations. Round your present value factor to 4 decimals and finalanswerito the mosset whole dolat) Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information aboh two alternatives follows. Management requires a 10% rate of return on its investments. (PV of \$1, EV of \$1, PVA of \$1, and FVA o (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $150,000 and results in $60,0 net cash flows in each of the next five years. After five years, it can be sold for a $30,000 salvage value. Alternative 2: Sell the old machine for $50,000 and buy a new one. The new machine requires an initial investment of $290,00 can be sold for a $10,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of $40,000 in each of the next five years. Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of altemative 2 . 3. Which alternative should management select based on net present value? Complete this question by entering your answers in the tabs below. Determine the net present value of aiternative 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.) (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $150,000 and results in net cash flows in each of the next five years After five years, it can be sold for a $30,000 salvage value: Alternative 2: Sell the old machine for $50,000 and buy a new one. The new machine requires an initial investment of $2 can be sold for a $10,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flo $40,000 in each of the next five years. Required: 1. Determine the net present value of aiternative 1. 2. Determine the net present value of altemative 2 3. Which alternative should management select based on net present value? Complete this question by entering your answers in the tabs below. Which alternative should management select based on net present value
