Question: Rust Industrial Systems Company is trying to decide between two different conveyor belt systems. System A costs $310,000, has a four-year life, and requires

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

Rust Industrial Systems Company is trying to decide between two different conveyor belt systems. System A costs $310,000, has a four-year life, and requires $109,000 in pretax annual operating costs. System B costs $390,000, has a six-year life, and requires $103,000 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 24 percent and the discount rate is 8 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.) System A System B Which conveyor belt system should the firm choose?

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System A YEAR 0 1 2 3 4 System B YEAR 0 1 2 3 4 5 6 cash flows 310000 64240 64240 64240 64240 cas... View full answer

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