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Lang Industrial Systems Company LISC is trying to decide between two different conveyor belt systems System A costs $224000 has a fouryear life and requires $71000 in pretax annual operating

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $224,000, has a four-year life, and requires $71,000 in pretax annual operating costs. System B costs $318,000, has a six-year life, and requires $65,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever project is chosen, it will not be replaced when it wears out. The tax rate is 30 percent and the discount rate is 9 percent. Calculate the NPV for both conveyor belt systems. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Which conveyor belt system should the firm choose? System B System A
 
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Apr 01 2020 View more View Less

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