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 requires a 10% rate of retum on its investments. (PV of S1. EV o $1. PVA of $1. and FVA Of 51) (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. If the old machine is overhauled, it will be kept for another five years and then sold for its salvage value. Cost of old machine $112.000 Cont of overhaul 150,000 Annual expected revenues generated 95,000 Annual cash operating conta after overhaul 42,000 Salvage value of old machine in 5 years 15,000 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 Coat of new machine Salvage value of old machine now Annual expected revenues generated Annual cash operating conta Salvage value of new machine in 5 years 5300.000 29,000 100,000 32,000 20,000 Annual con operating costa Salvage value of new machine in 5 years 32,000 20,000 Required: 1. Determine the not present value of alternative Initial cash investment (net) Chart values are based on: Year Subsequent Cash Inflow (outflow) * Table factor Present Value 1 2 3 4 5 2. Determine the not present value of alternative 2 Initial cash investment inet) Subsequent Cash inflow The factor Vaar Present 2. Determine the net present value of alternative 2. Initial cash investment (net) Subsequent Year Cash inflow X Table factor - (outflow) 1 Present Value 2 3 5 Now 3. Which alternative should management select