Xercise 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 of the system is $65,000. 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 Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment (PV of $1. FV of S1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Return Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B 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.) Cash Flow Select Chart PV Present Amount x Factor Value Annual cash flow Future Value of 1 S 311.000 4.3550 $ 1,354,405 Residual value Future Value of an Annuity of 1 65,000 0.5640 36,660 Immediate cash outflows $ 1,391,065 Present value of cash inflows (701,000) Net present value $ 690,065 X X Room Required B > Answer is complete but not entirely correct. 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.). Cash Flow Select Chart Amount Annual cash flow Residual value PV Factor 5.3350 0.4670 Present Value 912,285 171,000 42,000 $ x Future Value of an Annuity of 1 Future Value of 1 Immediate cash outflows Present value of cash inflows Net present value $ 19,614 931,899 (490,000) 441,899