A new operating system for an existing machine is expected to cost $780,000 and have a useful life of six years. The system yields an incremental after-tax income of $190,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $17,600.
A machine costs $510,000, has a $31,700 salvage value, is expected to last eight years, and will generate an after-tax income of $76,000 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 $1) (Use appropriate factor(s) from the tables provided.)
A new operating system for an existing machine is expected to cost $780,000 and have a useful life of six years. The system yields an incremental after-tax income of $190,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $17,600. (Round your answers to the nearest whole dollar.)
Cash FlowSelect ChartAmountxPV Factor=Present Value
Annual cash flow =$0
Residual value =0
Net present value
A machine costs $510,000, has a $31,700 salvage value, is expected to last eight years, and will generate an after-tax income of $76,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.)
Cash FlowSelect ChartAmountxPV Factor=Present Value
Annual cash flow =$0
Residual value =0
Net present value
Answers: 2
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