Problem 24-4A Computing net present value of alternate investments LO P3 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 r of S1. EVof S1. PVA of S1. and FVA of S) (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. If the old machine is overhauled, t will be kept for another five years and equires a 10% rateof return on its vest nents Use the then sold for its salvage value. Cost of old nachine Cost of overhaul Annual expected revenues generated Annual cash operating costs after overhaul salvage value of old machine in 5 years $106,000 151,000 85,000 46,000 20,000 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 now Annual expected revenues generated Annual cash operating costs Salvage value of new machine in 5 years 305, 000 33,000 109,000 29,000 13,000 Required: Determine the net present value of alternative 1. Initial cash investment (net) Chart values are based on: Subsequent Cash inflowx Year Table factorPresent Value (outflow) 2 1. Determine the net present value of alternative 1. Initial cash investment (net) Chart values are based on: ts Subsequent Cash inflowx Table factor Year Present Value (outflow) 01:38:59 2 3 Book Print rences Determine the net present value of alternative 2. Initial cash investment (net) Subsequent Cash inflow k | Table factor := Present Value ! Year outflow) 4 Now K Prey 2 of 2