Rust Industrial Systems is trying to decide between two different conveyor belt systems. System A costs $224,000, has a four-year life, and requires $71,000 in pretax annual operating costs. System B costs $318,000, has a six-year life, and requires $65,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 24 percent and the discount rate is 9 percent. Calculate the EAC for both conveyor belt systems. Note: Your answers should be negative values and indicated by minus signs. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Which conveyor belt system should the firm choose? multiple choice System A System B
Rust Industrial Systems is trying to decide between two different conveyor belt systems. System A costs $224,000, has a four-year life, and requires $71,000 in pretax annual operating costs. System B costs $318,000, has a six-year life, and requires $65,000 in pretax annual operating costs. Both systems are to be
Note: Your answers should be negative values and indicated by minus signs. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
Which conveyor belt system should the firm choose?
multiple choice
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System A
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System B
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