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Make sure to answer both parts of the question requirement A and B. Thank you! 13 a. A new operating system for an existing machine
Make sure to answer both parts of the question requirement A and B. Thank you!
13 a. A new operating system for an existing machine is expected to cost $800,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $29,400. b. A machine costs $470,000, has a $29,300 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below. Required A Required B A new operating system for an existing machine is expected to cost $800,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $29,400. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount PV Factor Present Value $ 0 Annual cash flow Present Value of an Annuity of 1 Residual value Present Value of 1 = 0 Present value of cash inflows Immediate cash outflows Net present value Required A Required B > 13 a. A new operating system for an existing machine is expected to cost $800,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $29,400. b. A machine costs $470,000, has a $29,300 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below. Required A Required B A machine costs $470,000, has a $29,300 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount PV Factor Present Value = $ 0 Annual cash flow Present Value of an Annuity of 1 Residual value Present Value of 1 0 Present value of cash inflows Immediate cash outflows Net present valueStep by Step Solution
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