Comparing Mutually Exclusive Projects [ LO1] Lang Industrial Systems Company ( LISC) is trying to decide between two different conveyor belt systems. System A costs $ 240,000, has a four- year life, and requires $ 75,000 in pretax annual operating costs. System B costs $ 340,000, has a six-year life, and requires $ 69,000 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. If the tax rate is 34 percent and the discount rate is 8 percent, which project should the firm choose? (PLEASE USE THE TEXT AS A GUIDE) USE THE EXCEL TO CALCULATE THE ANSWERS)

20. Comparing Mutually Exclusive Projects [ LO1] Lang Industrial Systems Company ( LISC) is trying to decide between two different conveyor belt systems. System A costs $ 240,000, has a four- year life, and requires $ 75,000 in pretax annual operating costs. System B costs $ 340,000, has a six-year life, and requires $ 69,000 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. If the tax rate is 34 percent and the discount rate is 8 percent, which project should the firm choose? Years Project A 0 Years Project B 0 1 2 3 4 1 2 3 4 5 6 Username: Gary MongioviBook: Fundamentals of Corporate Finance, 11th Edition. No part of any book may be reproduced or transmitted in any form by any means without the publisher's prior written permission. 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