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a. A new operating system for an existing machine is expected to cost $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. b. A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 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. A new operating system for an existing machine is expected to cost $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. b. A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 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.)

Quickbooks Online Accounting
Quickbooks Online Accounting
3rd Edition
ISBN:9780357391693
Author:Owen
Publisher:Owen
Chapter5: Operating Activities: Purchases And Cash Payments
Section: Chapter Questions
Problem 2.1C
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Edit View History Bookmarks People Window Help on 6 - Chapter 24 Requi x O tableb-1.JPG (788×519) tableb-1.JPG (788×519) E Google Docs zto.mheducation.com/ext/map/index.html?_con=con&external_browser%3D0&launchUrl=https%253A%252F%252.. equired Homework 1 Saved a. A new operating system for an existing machine is expected to cost $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. b. A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 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.) Complete this question by entering your answers in the tabs below. Required A Requiree B A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount x PV Factor = Present Value 129,000 x 28,000 x Annual cash flow Present Value of an Annuity of 1 24 24 Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value < Required A Required B> < Prey 6 of 11 Next >
Transcribed Image Text:Edit View History Bookmarks People Window Help on 6 - Chapter 24 Requi x O tableb-1.JPG (788×519) tableb-1.JPG (788×519) E Google Docs zto.mheducation.com/ext/map/index.html?_con=con&external_browser%3D0&launchUrl=https%253A%252F%252.. equired Homework 1 Saved a. A new operating system for an existing machine is expected to cost $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. b. A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 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.) Complete this question by entering your answers in the tabs below. Required A Requiree B A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.) Cash Flow Select Chart Amount x PV Factor = Present Value 129,000 x 28,000 x Annual cash flow Present Value of an Annuity of 1 24 24 Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value < Required A Required B> < Prey 6 of 11 Next >
ile Edit View History Bookmarks People Window Help estion 6 - Chapter 24 Requi x O tableb-1.JPG (788×519) O tableb-1.JPG (788×519) E Google Docs ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252... Required Homework 6 Saved H a. A new operating system for an existing machine is expected to cost $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. b. A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 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.) 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 $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. (Round your answers to the nearest whole dollar.) Select Chart Amount x PV Factor = Present Value Cash Flow $ 262,000 x 30,000 x Annual cash flow Present Value of an Annuity of 1 2$ Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Required B> < Prev 6 of 11 Next >
Transcribed Image Text:ile Edit View History Bookmarks People Window Help estion 6 - Chapter 24 Requi x O tableb-1.JPG (788×519) O tableb-1.JPG (788×519) E Google Docs ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252... Required Homework 6 Saved H a. A new operating system for an existing machine is expected to cost $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. b. A machine costs $420,000, has a $28,000 salvage value, is expected to last eight years, and will generate an after-tax income of $80,000 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.) 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 $582,000 and have a useful life of six years. The system yields an incremental after-tax income of $170,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $30,000. (Round your answers to the nearest whole dollar.) Select Chart Amount x PV Factor = Present Value Cash Flow $ 262,000 x 30,000 x Annual cash flow Present Value of an Annuity of 1 2$ Residual value Present Value of 1 Present value of cash inflows Immediate cash outflows Net present value Required B> < Prev 6 of 11 Next >
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