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 8% rate of return on its investments. Use the m S1. EV of S1 PVA of S1. and EVA of S) (Use appropriete 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 $107,0e0 151,069 88,800 36,000 17,800 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 novw Annusl expected revenues generated Annusl cash operating costs salvage value of new machine in 5 years $385,060 34,000 100,000 22,000 8,000 1. Determine the net present value of alternative 1. Initial cash investment (net) Chart values are based on: Subsequent Cash inflow x Table factorPresent Value Year (outflow) 4 Determine the net present value of alternative 2. Initial cash investment (net) Subsequent Cash inflow kl Table factor |=| Present Value Year (outflow) 2 4 Now 3. Which alternative should management select