Question
In: Finance
Peyton Manufacturing is trying to decide between two different conveyor belt systems. System A costs $252,000,...
Peyton Manufacturing is trying to decide between two different conveyor belt systems. System A costs $252,000, has a four-year life, and requires $78,000 in pretax annual operating costs. System B costs $354,000, has a six-year life, and requires $72,000 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 be replaced when it wears out. The tax rate is 23 percent and the discount rate is 8 percent.
Calculate the NPV for both conveyor belt systems.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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EDP is trying to decide between two different conveyor belt systems. System A costs $438,000, has...
EDP is trying to decide between two different conveyor belt
systems. System A costs $438,000, has a six-year life, and requires
$83,000 in pretax annual operating costs. System B costs $369,000,
has a five-year life, and requires $92,000 in pretax annual
operating costs. Both systems are to be depreciated straight-line
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 23...
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