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$73,000 in pretax annual operating costs. System B costs $380,000, has a 6-year life, and requires $64,000 in pretax annual operating costs. Both systems are

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$73,000 in pretax annual operating costs. System B costs $380,000, has a 6-year life, and requires $64,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system, when one wears out, it must be replaced. Assume the tax rate is 23 percent and the discount rate is 7.5 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.) S System A System B EAC -76,734 37 -148,687 25 S Which conveyor belt system should the firm choose? O System A System B Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt systems. System A costs $265,000, has a 4-year life, and requires $73,000 in pretax annual operating costs. System B costs $380,000, has a 6-year life, and requires $64,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system, when one wears out, it must be replaced. Assume the tax rate is 23 percent and the discount rate is 7.5 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.) 04:03:34 Book Hint System A System B EAC -76,734 37 -148687 25 $

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