Chapter 10 - Assignment 1.4 Problem 3: Comparing Mutually-Exclusive Projects 10 Points Lang Industrial Systems Company (LISC) is trying to decide between two different conveyer belt systems. System A costs $290,000, has a four-year life, and requires $80,000 in pretax annual operating costs. System B costs $375,000, has a six-year life, and requires $74,000 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 applicable tax rate is 34 percent and the discount rate is 8 percent. a) Calculate the OCF and NPV for each project. b) Which project should the firm choose? Use the Template Provided Below to Create Your Solution - Pay close attention to the formulas and formatting of the inputs. Input area: System A : Cost Pretax annual operating cost Life System B: Cost Pretax annwal operating cost Life Both: Output area: System A: OCFNPVSystemB:OCF#DIV/O!#DIV/O#DIV/0!#DIV/O! If the system will not be replaced when it wears out, then \#DIV/0! should be chosen, because it has the more positive NPV