Dangerfield Industrial systems company(DISC) is trying to decide between two different conveyor belt systems. System A costs $430,000 has a four year life and requires a $110,000 in pretax annual operating costs. System B costs $570,000, has a six year life, and requires a $98,000 in pre-tax annusl 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. It the tax rate is 34% and the discount rate is 11%, which project should the firm choose?
Paper#5711 | Written in 18-Jul-2015Price : $25