Business, 18.03.2021 01:10 nyahdrake

A. A new operating system for an existing machine is expected to cost $684,000 and have a useful life of six years. The system yields an incremental after-tax income of $200,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $60,000. b. A machine costs $480,000, has a $40,000 salvage value, is expected to last eight years, and will generate an after-tax income of $110,000 per year after straight-line depreciation.

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

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A. A new operating system for an existing machine is expected to cost $684,000 and have a useful lif...

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