Required:

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 $2.$

Note: 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. Required:

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.

Which alternative should management select based on net present value?

Management should select

ired $2$

Alternative $1$

Alternative $2$Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information about the

two alternatives follows. Management requires a $12\%$ rate of return on its investments. $($PV of $$1,Fvv$ of $$1,$PvvA of $$1,$ and FvvA of $$1)$

Note: Use appropriate factor$($s$)$ from the tables provided.

Alternative $1$: Keep the old machine and have it overhauled. This requires an initial investment of $$157,000$ and results in $$53,000$ of

net cash flows in each of the next five years. After five years, it can be sold for a $$22,000$ salvage value.

Alternative $2$: Sell the old machine for $$36,000$ and buy a new one. The new machine requires an initial investment of $$300,000$ and

can be sold for a $$6,000$ salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of

$$48,000$ in each of the next five years.

Required:

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 $3$

Determine the net present value of alternative $1.$

Note: Do not round intermediate calculations. Round your present value factor to $4$ decimals and final answers to the nearest

whole dollar.