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Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $760,000 and have a useful life of six years. The system yields an incremental after-tax income of $290,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $23,000. b. A machine costs $450,000, has a $21,500 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 51) (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 $760,000 and have a useful life of six years. The system yields an incremental after-tax income of $290,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $23,000. (Round your answers to the nearest whole dollar) Select Chart Amount * PV Factor - Present Value Cash Flow Annual cash flow Residual value Net present value Required A Required B A machine costs $450,000, has a $21,500 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.) Select Chart Amount + PV Factor - Present Value Cash Flow Annual cash flow Residual value Net present value

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