# a. 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.b. 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.   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.)

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a. 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. b. 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.

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.)

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