1. A new operating system for an existing machine is expected to cost $550,000 and have a useful life of six years. The system yields an incremental after-tax income of $215,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $14,600.
2. A machine costs $590,000, has a $31,400 salvage value, is expected to last eight years, and will generate an after-tax income of $78,000 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 $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

a. A new operating system for an existing machine is expected to cost $550,000 and have a useful life of six years. The system yields an incremental after-tax income of $215,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $14,600. b. A machine costs $590,000, has a $31,400 salvage value, is expected to last eight years, and will generate an after-tax income of $78,000 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 $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) 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 $550,000 and have a useful life of six years. The system yields an incremental after-tax income of $215,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $14,600. (Round your answers to the nearest whole dollar.) Amount PV Factor Present Value $ 0 $ 14,600 0.5645) = 8,242 Cash Flow Select Chart Annual cash flow Present Value of an Annuity of 1 Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value a. A new operating system for an existing machine is expected to cost $550,000 and have a useful life of six years. The system yields an incremental after-tax income of $215,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $14,600. b. A machine costs $590,000, has a $31,400 salvage value, is expected to last eight years, and will generate an after-tax income of $78,000 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 $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below. Required A Required B A machine costs $590,000, has a $31,400 salvage value, is expected to last eight years, and will generate an after-tax income of $78,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Amount Present Value PV Factor 5.3349] = 0.4665) = $ 0 $ 31,400 x 14,648 Cash Flow Select Chart Annual cash flow Present Value of an Annuity of 1 Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value