Rust Industrial Systems Company is trying to decide between two different conveyor belt

systems. System A costs $$295,000,$ has a four$-$year life, and requires $$77,000$ in pretax

annual operating costs. System B costs $$355,000,$ has a six$-$year life, and requires

$$83,000$ 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 $21$ percent and the

discount rate is $8$ 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

onswers to $2$ decimal ploces, e$.$g$.,32\mathrm{.}16.)$

Which conveyor belt system should the firm choose?

System B

System A

Rust Industrial Systems Company is trying to decide between two different conveyor belt

systems. System A costs $$295,000,$ has a four$-$year life, and requires $$77,000$ in pretax

annual operating costs. System B costs $$355,000,$ has a six$-$year life, and requires

$$83,000$ 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 $21$ percent and the

discount rate is $8$ percent.

Calculate the NPV for both conveyor belt systems. $($A negative onswer should be

indicated by a minus sign. Do not round intermediate calculations and round your

answers to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Answer is complete but not entirely correct.

Which conveyor belt system should the firm choose?

System B $O$

System $A$