None Letang Industrial Systems Company (LISC) is trying to decide between two differentconveyor belt systems. System A costs $335,000, has a four-year life, and requires$129,000 in pretax annual operating costs. System B costs $415,000, has a six-year life,and requires $123,000 in pretax annual operating costs. Both systems are to bedepreciated 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. The tax rate is 24percent and the discount rate is 9 percent.Calculate the NPV for both conveyor belt systems. (A negative answer should beindicated by a minus sign. Do not round intermediate calculations and round youranswers to 2 decimal places, e.g., 32.16.)System ASystem B

Step 1:Final answer short: System A: NPV = $562,795.80System B: NPV = $1,279,931.39

Answered: Letang Industrial Systems Company…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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