Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $610,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $29,600. b. A machine costs $460,000, has a $21,800 salvage value, is expected to last eight years, and will generate an after-tax income of $62,000 per year after straight-line depreciation. Assume the company requires a 12% 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 $610,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $29,600. (Round your answers to the nearest whole dollar.) Cash Flow Annual cash flow Residual value Select Chart Amount PV Factor = Present Value Present Value of an Annuity of 1 Present Value of 1 = $ 0 0 Net present value Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $610,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $29,600. b. A machine costs $460,000, has a $21,800 salvage value, is expected to last eight years, and will generate an after-tax income of $62,000 per year after straight-line depreciation. Assume the company requires a 12% 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 $460,000, has a $21,800 salvage value, is expected to last eight years, and will generate an after-tax income of $62,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Annual cash flow Residual value Net present value Amount PV Factor = Present Value = $ 0 = 0