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a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. b. A machine costs $520,000, has a $20,300 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 12% 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.) 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 $710,0000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. (Round your answers to the nearest whole dollar.) PV Factor Cash Flow Select Chart Amount Present Value X Annual cash flow Present Value of an Annuity of 1 0 $ Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value KRequired A Required B A machine costs $520,000, has a $20,300 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.) x PV Factor Cash Flow Select Chart Amount Present Value Annual cash flow Residual value 0 0 Net present value Required A Required B

a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. b. A machine costs $520,000, has a $20,300 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 12% 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.) 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 $710,0000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. (Round your answers to the nearest whole dollar.) PV Factor Cash Flow Select Chart Amount Present Value X Annual cash flow Present Value of an Annuity of 1 0 $ Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value KRequired A Required B A machine costs $520,000, has a $20,300 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.) x PV Factor Cash Flow Select Chart Amount Present Value Annual cash flow Residual value 0 0 Net present value Required A Required B

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. b. A machine costs $520,000, has a $20,300 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 12% 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.) 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 $710,0000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. (Round your answers to the nearest whole dollar.) PV Factor Cash Flow Select Chart Amount Present Value X Annual cash flow Present Value of an Annuity of 1 0 $ Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value KRequired A Required B
Transcribed Image Text:a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. b. A machine costs $520,000, has a $20,300 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 12% 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.) 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 $710,0000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. (Round your answers to the nearest whole dollar.) PV Factor Cash Flow Select Chart Amount Present Value X Annual cash flow Present Value of an Annuity of 1 0 $ Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value KRequired A Required B
A machine costs $520,000, has a $20,300 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.) x PV Factor Cash Flow Select Chart Amount Present Value Annual cash flow Residual value 0 0 Net present value Required A Required B
Transcribed Image Text:A machine costs $520,000, has a $20,300 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.) x PV Factor Cash Flow Select Chart Amount Present Value Annual cash flow Residual value 0 0 Net present value Required A Required B
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