Question: Problem 10-24 Comparing Mutually Exclusive Projects [LO4] Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs

Problem 10-24 Comparing Mutually Exclusive Projects [LO4]

Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $325,000, has a four-year life, and requires $121,000 in pretax annual operating costs. System B costs $405,000, has a six-year life, and requires $115,000 in pretax annual operating costs. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 22 percent and the discount rate is 11 percent.

Calculate the EAC 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.)

Which conveyor belt system should the firm choose?

multiple choice

System B
System A

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