Interstate Manufacturing is considering either replacing one of its old machines with a new machine or having the old machine overhauled. Information about the two alternatives follows. Management requires a 10% rate of return on its investments. Use the Table 24.1 and Table 24.3Alternative 1: Keep the old machine and have it overhauled. If the old machine is overhauled, it will be kept for another five years and then sold for its salvage value.——————————————————————————– Alternative 2: Sell the old machine and buy a new one. The new machine is more efficient and will yield substantial operating cost savings with more product being produced and sold.——————————————————————————– Requirement 1: Determine the net present value of alternative 1. (Round “PV Factor” to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount. Omit the “$” sign in your response.) Requirement 2: Determine the net present value of alternative 2. (Negative amount should be indicated by a minus sign. Round “PV Factor” to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount. Omit the “$” sign in your response.) Requirement 3: Which alternative do you recommend that management select? (Click to select)Alternative 2Alternative 1
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