Calculate the NPV for both conveyor belt systems

Assignment Help Financial Management

Reference no: EM13880146

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $208,000, has a four-year life, and requires $67,000 in pretax annual operating costs. System B costs $294,000, has a six-year life, and requires $61,000 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. The tax rate is 34 percent and the discount rate is 8 percent. Calculate the NPV for both conveyor belt systems.

Reference no: EM13880146

Questions Cloud

Forecasts of revenues over the lifetime of project : These are the forecasts of revenues over the lifetime of a project. Assume all cash flows occur at the end of the year. Yearly expenses from year 1 to year 3: $0 Yearly expenses from year 4 to year 10: $55 Million Yearly expected revenues from year 4..

Calculate the yearly interest income of each bond : Calculate the yearly interest income of each bond on the basis of its coupn rate and the number of bonds that Mark could buy with his $20,000.

Ifrs as applied by af and a typical balance sheet : 1.Air FranceKLM (AF), a French company, prepares its financial statements according to International Financial Reporting Standards.

Calculate the NPV for both conveyor belt systems : Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $208,000, has a four-year life, and requires $67,000 in pretax annual operating costs. Calculate the NPV for both conveyor belt sys..

Should firm b insist on 0 percent defects : Firm S supplies inputs to firm B. Because producing the input is quite complicated, some defects are inevitable. Firm S can reduce the rate of defects at a cost. In turn, defective parts lower firm B's profits (because of lost sales and unhappy cu..

Explain the difference between these two audit techniques : The test data method and an integrated test facility are similar in that they are both tests of applications controls and they both rely on the use of test data. Explain the difference between these two audit techniques.

How did greece end up in their debt crisis : How did Greece end up in their debt crisis they are in today? Additionally, what steps is the Greek government taking to manage their debt? Even though they have received bailouts and emergency loans, why are they still in debt? Lastly, why don't oth..

How much did CCCs stock return during the month : You are considering investing in Cho's Chocolate Confectionary (CCC). CCC's stock price last month was 63.16, CCC's stock price this month was 45.19. As well, CCC paid a dividend of 7.67. After the dividend was paid but before the end of the month, C..

User Account

All Pages