Question
Dangerfield Industrial Systems Company (DISC) is trying to decide between two different conveyor belt systems. System A costs $430,000, has a four-year life, and requires
Dangerfield Industrial Systems Company (DISC) is trying to decide between two different conveyor belt systems. System A costs $430,000, has a four-year life, and requires $110,000 in pretax annual operating costs. System B costs $570,000, has a six-year life, and requires $98,000 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. If the tax rate is 34 percent and the discount rate is 11 percent, the NPV for project A is $541,843.17 incorrect and the NPV for project B is $706,984.82 incorrect . Therefore, the firm should choose project B incorrect. (Negative amounts should be indicated by a minus sign. Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))
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