1. An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $9,200,000 and will be sold for $2,680,000 at the end of the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? Refer to (MACRS schedule) (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567)

What is the Aftertax salvage value ?

2.

Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt systems. System A costs $280,000, has a 4-year life, and requires $85,000 in pretax annual operating costs. System B costs $360,000, has a 6-year life, and requires $79,000 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 23 percent and the discount rate is 10 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?