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EDP is trying to decide between two different conveyor belt systems. System A costs $ 4 3 8 , 0 0 0 , has a
EDP is trying to decide between two different conveyor belt systems. System A costs $ has a sixyear life, and requires $ in pretax annual
operating costs. System B costs $ has a fiveyear life, and requires $ in pretax annual operating costs. Both systems are to be depreciated
straightline to zero over their lives and will have a zero salvage value. Whichever system is chosen, it will not be replaced when it wears out. The tax rate is
percent and the discount rate is percent. Which system should the firm choose and why?
A A; The net present value is $
B B; The net present value is $
C A; The net present value is $
D B; The net present value is $
E B: The net present value is $
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