In: Accounting
A new operating system for an existing machine is expected to
cost $680,000 and have a...
- A new operating system for an existing machine is expected to
cost $680,000 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 $20,400.
- A machine costs $380,000, has a $33,800 salvage value, is
expected to last eight years, and will generate an after-tax income
of $66,000 per year after straight-line depreciation.A new
operating system for an existing machine is expected to cost
$680,000 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 $20,400. (Round your answers to the nearest whole
dollar.)
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.)
Part B
A machine costs $380,000, has a $33,800 salvage value, is
expected to last eight years, and will generate an after-tax income
of $66,000 per year after straight-line depreciation. (Round your
answers to the nearest whole dollar.)