A new operating system for an existing machine is expected to cost $610,000 and have a...

A new operating system for an existing machine is expected to cost $610,000 and have a useful life of six years. The system yields an incremental after-tax income of $205,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $26,200.
A machine costs $490,000, has a $21,800 salvage value, is expected to last eight years, and will generate an after-tax income of $68,000 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.)

Expert Solution

ekkarill92 answered 2 years ago

A: A new operating system for an existing machine is expected to cost $580,000 and have...

A: A new operating system for an existing machine is expected to cost $580,000 and have a useful life of six years. The system yields an incremental after-tax income of $280,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $24,600. B: A machine costs $410,000, has a $33,500 salvage value, is expected to last eight years, and will generate an after-tax income of $86,000 per year after straight-line depreciation. Assume the company requires...

A new operating system for an existing machine is expected to cost $670,000 and have a...

A new operating system for an existing machine is expected to cost $670,000 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 $12,200. A machine costs $580,000, has a $33,500 salvage value, is expected to last eight years, and will generate an after-tax income of $86,000 per year after straight-line depreciation. Assume the company requires a 10%...

A new operating system for an existing machine is expected to cost $590,000 and have a...

A new operating system for an existing machine is expected to cost $590,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,800. A machine costs $450,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $64,000 per year after straight-line depreciation. Assume the company requires a 12%...

A new operating system for an existing machine is expected to cost $650,000 and have a...

A new operating system for an existing machine is expected to cost $650,000 and have a useful life of six years. The system yields an incremental after-tax income of $175,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $23,800. A machine costs $540,000, has a $35,900 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year after straight-line depreciation. Assume the company requires a 12%...

A new operating system for an existing machine is expected to cost $660,000 and have a...

A new operating system for an existing machine is expected to cost $660,000 and have a useful life of six years. The system yields an incremental after-tax income of $270,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,400. A machine costs $520,000, has a $36,800 salvage value, is expected to last eight years, and will generate an after-tax income of $74,000 per year after straight-line depreciation. Assume the company requires a 10%...

A new operating system for an existing machine is expected to cost $640,000 and have a...

A new operating system for an existing machine is expected to cost $640,000 and have a useful life of six years. The system yields an incremental after-tax income of $175,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $20,800. A machine costs $550,000, has a $24,800 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%...

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...

A new operating system for an existing machine is expected to cost $700,000 and have a...

A new operating system for an existing machine is expected to cost $700,000 and have a useful life of six years. The system yields an incremental after-tax income of $215,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $28,200. A machine costs $510,000, has a $37,700 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%...

a. A new operating system for an existing machine is expected to cost $580,000 and have...

a. A new operating system for an existing machine is expected to cost $580,000 and have a useful life of six years. The system yields an incremental after-tax income of $175,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $19,600. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount x PV Factor = Present Value Annual cash flow = $0 Residual value = 0 Net present value b. A...

A new operating system for an existing machine is expected to cost $531,000 and have a...

A new operating system for an existing machine is expected to cost $531,000 and have a useful life of six years. The system yields an incremental after-tax income of $155,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $15,000. A machine costs $390,000, has a $22,000 salvage value, is expected to last eight years, and will generate an after-tax income of $65,000 per year after straight-line depreciation. Assume the company requires a 11%...

Question