Question
Ignore question 41, It for reference to answer question 42. 41. Comparing Mutually Exclusive Projects (L04) Kingsmill Industrial Systems Company (KISC) is trying to decide
Ignore question 41, It for reference to answer question 42.
41. Comparing Mutually Exclusive Projects (L04) Kingsmill Industrial Systems Company (KISC) is trying to decide between two different conveyor belt systems. System A costs $290,000, has a fouryear life. and requires $80,000 in pretax annual operating costs. System B costs $35,000. has a sotyear life, and requires $'i'4.000 in pretax annual operating costs. Both systems are to be depreciated at 30% per year (Class 10) and will have no salvage value. Whichever project is chosen, it will not be replaced when it wears out. If the tax rate is 34% and the discount rate is 8%. which project should the rm choose?
42. Comparing Mutuslly Exclusive Projects {[04} Suppose in the previous problem that KISC always needs a conveyor belt system: when one wears out, it must be replaced. Which project should the rm choose now?
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