Business, 17.06.2020 04:57 amandajennings01

A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. Required A Required B
Cash Flow Select Chart Amount * PV Factor = Present Value
Annual Cash Flow Present Value of an Annuity of 1
Residual value Present Value of 1
Present value of cash inflows
Immediate Cash Flow
Net Present Value
A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation.
Required A Required BCash Flow Select Chart Amount * PV Factor = Present Value Annual Cash Flow Present Value of an Annuity of 1Residual value Present Value of 1 Present value of cash inflows Immediate Cash Flow Net Present Value
Assume the company requires a 10% rateo return on its vestments. Compute the net present value of each potential investment.

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