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Business, 06.05.2021 23:00 rishiganesh

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.

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Assume the company requires a 10% rateo return on its vestments. Compute the net present value of each potential investment.

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