Question: Comparing Mutually Exclusive Projects [ L O 1 ] Rust Industrial Systems Company i s trying t o decide between two different conveyor belt systems.

Comparing Mutually Exclusive Projects [LO1] Rust Industrial Systems Company is trying to decide between two different
conveyor belt systems. System A costs $315,000, has a four-year life, and requires $81,000in pretax annual operating costs. System
B costs $365,000, has a six-year life, and requires $83,000in pretax annual operating costs. Both systems are tobe 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. If the tax rate is21 percent and the discount rate is8 percent, which project should the firm choose?
Comparing Mutually Exclusive Projects [ L O 1 ]

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