Dangerfield Industrial Systems is trying to determine which one of two conveyor belt systems to be purchased. tax rate of 34% and required return =11% System A B Investment cost 430,000 570,000 Life [years] 4 6 Annual operating cost [pretax] 110,000 98,000 Both systems to be depreciated using straight line to zero value over useful life and will have no salvage value. Which project should if chosen, if system is NOT replaced at the end of useful life?
Dangerfield Industrial Systems is trying to determine which one of two conveyor belt systems to be purchased. tax rate of 34% and required return =11% System A B Investment cost 430,000 570,000 Life [years] 4 6 Annual operating cost [pretax] 110,000 98,000 Both systems to be depreciated using straight line to zero value over useful life and will have no salvage value. Which project should if chosen, if system is NOT replaced at the end of useful life?
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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Dangerfield Industrial Systems is trying to determine which one of two conveyor belt systems to be purchased.
tax rate of 34% and required return =11%
|
System |
A |
B |
|
Investment cost |
430,000 |
570,000 |
|
Life [years] |
4 |
6 |
|
Annual operating cost [pretax] |
110,000 |
98,000 |
Both systems to be depreciated using straight line to zero value over useful life and will have no salvage value.
Which project should if chosen, if system is NOT replaced at the end of useful life?
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