Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $701,000 and have a useful life of six years. The system yields an incremental after-tax income of $205,000 each year after deducting its straight-line depreciation. The predicted salvage value b. A machine cost $490,000, has a $42.000 salvage value, is expected to last eight years, and will generate an after-tax income of $115,000 per year after straight-line depreciation 15.21 Assume the company requires a 10% rate of return on its investments, Compute the net present value of each potential investment. (PV of $1. EV of $1. PVA of $1. and EVA of $.1) (Use appropriate factor(s) from the tables provided.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Required A Required B 8.33 points 02.15.06 A new operating system for an existing machine is expected to cost $701,000 and have a useful life of six years. The system yields an incremental after-tax income of $205,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $65,000. (Round your answers to the nearest whole dollar.) PV Present Cash Flow Select Chart Amount Factor Value Annual cash flow Present Value of an Annuity of 1 $ 311,000 4.3553 $ 1,354,498 Residual value Present Value of 1 $ 65,000 0.5645 36,693 Present value of cash inflows $ 1,391,191 Immediate cash outflows (701,000) Net present value $ 690.191 Roger Required B > Return to question Complete this question by entering your answers in the tabs below. Required A Required B A machine costs $490,000, has a $42,000 salvage value, is expected to last eight years, and will generate an after-tax Income of $115,000 per year after straight-line depreciation. (Round your answers to the nearest Whole dollar.) PV Present Cash Flow Select Chart Amount X Factor Value Annual cash flow Present Value of an Annuity of 1 $ 171.000 X 5.3350 $ 912,285 Residual value Present Value of 1 $ 42.000 X 0.4665 19,593 Present value of cash inflows $ 931,878 Immediate cash outflows (490,000 Net present value $ 441,861