is considebou tof s 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 8% rate of return on its investments. Use the (PV of $1, FV of $1, PVA of $1, and FVA of $1 (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 $114,000 153,000 Cost of old machine Cost of overhaul Annual expected revenues generated Annual cash operating costs after overhaul Salvage value of old machine in 5 years 90,000 42,000 24,000 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 $298,000 48,000 103,000 30,000 5,000 Cost of new machine Salvage value of old machine now Annual expected revenues generated Annual cash operating costs Salvage value of new machine in 5 years Requirec 1. Determine the net present value of alternative 1 Initial cash investment (net) Chart values are based on: Subsequent Cash inflowx Table factor Present Value Year outflow 4 resent value of cash inflows resent value of cash outflows et present value 2. Determine the net present value of alternative 2. Initial cash investment (net) Subsequent Cash inflowx Table factor Present Value Year outflow 4 Now resent value of cash inflows resent value of cash outflows et present value