Problem 24-4A Computing net present value of alter nate investments LO P3 Interstate Manufacturing is considering either replacing one of its old machines with a new machine or h overhauled information about the two alternatives follows. Management requires a 8% rate of return on its investments. Use th S1. EV of Si. PVA of S1, and EVA of S) (Use appropriate factors) from the tables provided.) aving the old machine e Por 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. $110,000 143,000 94,000 35,000 21,000 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 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. $307,000 34,000 110,000 25,000 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 Required: Determine the net present value of alternative 1 Initial cash investment (net) Chart values are based on Subsequent Cash inflow 1x Table factor|=| Present Value Year (outflow) 2 5 Determine the net present value of alternative 2 Initial cash investment (net) Subsequent Cash inflow x Table factor Present Value Year (outflow) 2 Now Which alternative should management select