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HISC is trying to decide between two different conveyor belt systems. System A costs $30,000, has a 4-year life, and requires $5,000 in pretax annual
HISC is trying to decide between two different conveyor belt systems. System A costs $30,000, has a 4-year life, and requires $5,000 in pretax annual operating costs. System B costs $42,000, has an 8-year life, and requires $4,000 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 system is chosen, it will not replaced when it wears out. The tax rate is 0 percent and the discount rate is 5 percent. What are the NPVs and EACs for each system?
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