Dasan Electronics is considering two different systems that are expected to have the same performance. System A costs 427,000,000Won with a 6-year life, and requires 112,000,000Won in pretax annual operating costs. System B costs 517,000,000Won with an 8-year life, and requires 79,000,000Won in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have a zero salvage value at the end of their lives. Whichever system is chosen, it will not be replaced when it wears out. The tax rate is 20 percent and the discount rate is 10 percent. Which system should the firm choose and why?

Answer rating: 100% (QA)

To determine which system Dasan Electronics should choose we need to calculate the Net Present Value ... View the full answer