Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $335,000, has a four-year life, and requires $129,000 in pretax annual operating costs. System B costs $415,000, has a six-year life, and requires $123,000 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 tax rate is 24 percent and the discount rate is 9 percent. Calculate the NPV for both conveyor belt systems. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) System A System B Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $335,000, has a four-year life, and requires $129,000 in pretax annual operating costs. System B costs $415,000, has a six-year life, and requires $123,000 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 tax rate is 24 percent and the discount rate is 9 percent. Calculate the NPV for both conveyor belt systems. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) System A System B
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
We listed management of expectations as one of the Feds new unconventional monetary policy tools. Explain what this new policy tool does. List the potential problem of this policy tool.
-
Explain the differences between x-bar and R-charts. How can they be used together and why would it be important to use them together?
-
The Ambrosia Bakery makes cakes for freezing and subsequent sale. The bakery, which operates five days a week, 52 weeks a year, can produce cakes at the rate of 116 cakes per day. The bakery sets up...
-
Discuss the impact of a charismatic founder on the board culture and processes.
-
1. If the variable cost per unit goes up, Contribution margin Break-even point a. Increases increases. b. Increases decreases. c. Decreases decreases. d. Decreases increases. e. Decreases remains...
-
) A Chinese steel producer has issued a 3-year, 8 percent coupon bond with face value RMB 1,000,000. i) How much is this bond worth to you if the interest rate is 8%? ii) How much is this bond worth...
-
Write a program that takes the x - y coordinates of a point in the Cartesian plane and prints a message telling either an axis on which the point lies or the quadrant in which it is found. The...
-
Jo recently set-up as a satay man along Bukit Timah Road in Singapore providing satay at parties. Jo bought-in 1,700 chicken satays at 50 cents per satay and had 700 satays at the end of the month....
-
How is it possible for a profitable business to experience cash flow problems?
-
Consider the Smart Sports business, and for each type of account listed above write down at least one example of an item that might be included under that heading.
-
If one of Dannis customers, who bought drinks worth 30 during January, was allowed not to pay immediately but was given one months credit, then: 1. What would be the effect on Dannis profit for...
-
Poppy started a business on 1 July 2011 as a personal fitness instructor and put in 8,000 capital to fund it. She prepared her first years accounts to 30 June 2012. During her first year, she...
-
In an intertemporal l decision-making context, the real interest rate is considered as the price of todays consumption relative to future consumption. True or False? The empirical fact that the labor...
-
6. (Potential Energy and Conservation of Energy) What should be the spring constant k of a spring designed to bring a 1200-kg car to rest from a speed of 95 km/h so that the occupants undergo a...
-
What are four common objectives for analyzing a business's financial information?
-
Which accounting concept is being applied when comparative financial statements are prepared to provide useful information for statement users?
-
What does a rate earned on average stockholders' equity show?
Study smarter with the SolutionInn App