Lang Industrial systems company (LISC) is trying to decide between two different conveyor belt systems

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Lang Industrial systems company (LISC) is trying to decide between two different conveyor belt systems. System A costs $240,000, has a four-year life, and requires $75,000 in pretax annual operating costs. System B costs $340,000, has a six-year life, and requires $69,000 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 tax rate 34% and the discount rate is 8%, which project should the firm choose?

SKU: lang-industrial-systems-company-lisc-is-trying-to-decide-between-two-different-conveyor-belt-systems Category: