Interstate Manufacturing is considering elther overhauling an old machine or replacing it with a new machine. 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 $$1)($Use approprlate factor$($s$)$ from the tables provided.$)$

Alternative $1$: Keep the old machine and have It overhauled. This requires an initial Investment of $$160,000$ and results in

$$70,000$ of net cash flows in each of the next five years. After five years, It can be sold for a $$20,000$ salvage value.

Alternative $2$: Sell the old machine for $$40,000$ and buy a new one. The new machine requires an initial investment of

$$295,000$ and can be sold for a $$10,000$ salvage value in five years. It would yleld cost savings and higher sales, resulting in

net cash flows of $$50,000$ in each of the next five years.

Requlred:

Determine the net present value of alternative $1.$

Determine the net present value of alternative $2.$

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.$)$