We Suleman LUTY IS LUISerty eier overhauny al ONLINE Ulping IL WILT New Irlano BLOULIE two alternatives follows. Management requires a 10% rate of return on its investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1 (Use appropriate factors) from the tables provided.) Alternative t: Keep the old machine and have it overhauled. This requires an initial investment of 153,000 and results in $42,000 of net cash flows in each of the next five years. After five years, it can be sold for a $24,000 salvage value. Alternative 2: Sell the old machine for $34,000 and buy a new one. The new machine requires an initial investment of $306,000 and can be sold for a $7.000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of $37,000 in each of the next five years Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of alternative 2 3. 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 Determine the net present value of alternative 1. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar) Net Cash Present Value Present Value of Hows Factors at 10% Cash Rows 42.000 24,000 Year 13 Salvage value year) Total In investment opent value MESTO MIRALLY SLUIDIT UVERTURE U WILTSHEWHITE BOUTIQUE two alternatives follows. Management requires a 10% rate of return on its investments. (PV of $1 PV of $1 PVA of $1, and FVA of $1 (Use appropriate factor(s) from the tables provided.) Alternativet Keep the old machine and have it overhauled. This requires an initial investment of $153,000 and results in $42,000 of net cash flows in each of the next five years. After five years, it can be sold for a $24,000 selvage value. Alternative 2: Sell the old machine for $34,000 and buy a new one. The new machine requires an initial investment of $306,000 and can be sold for a $7,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of $37,000 in each of the next five years. Required: 1. Determine the net present value of alternative 2. Determine the net present value of alternative 2 3. Which alternative should management select based on net present value? Complete this question by entering your answers in the tabs below. Required Requred Required Determine the net present value of alternative 2. (Negative net present values should be indicated with a minus sion. Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar) Net Cash Present Value Present Value of Flowe Factors at 10 Cash Flows Year 1.5 Salvage vake new machine Savage value old machine 1 0000 Totals Invest Net present value
