Conveyor belt systems-pretax annual operating costs

Assignment Help Financial Management

Reference no: EM13883755

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $204,000, has a four-year life, and requires $66,000 in pretax annual operating costs. System B costs $288,000, has a six-year life, and requires $60,000 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 35 percent and the discount rate is 10 percent.

Calculate the NPV for both conveyor belt systems.

Reference no: EM13883755

Questions Cloud

Dollar spot exchange rate : The current Swiss franc to U.S. dollar spot exchange rate is SFr1.60/$. The expected inflation over the coming year is 2 percent in Switzerland and 5 percent in the United states. According to purchasing power parity, what is the expected value of th..

Is the interest rate parity holding : A foreign exchange arbitrageur notices that the Japanese yen to U.S. dollar spot exchange rate is ¥108/$ and the three-month forward exchange rate is ¥107.30/$. The three-month $ interest rate is 5.20 percent per Annum and the three-month ¥ interest ..

About to retire and he wants to buy an annuity : Your uncles is about to retire and he wants to buy an annuity that will provide him with $62000 of income a year for 20 Years, with the first payment coming immediately. The going rate on such annuites is 5.25%. How much would it cost him to buy the ..

Written communication is an essential tool : Written communication is an essential tool for any professional. As with any skill, writing well is the result of practice followed by feedback and the use of relevant and appropriate sources. Therefore, the quality of writing is graded as part of th..

Conveyor belt systems-pretax annual operating costs : Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $204,000, has a four-year life, and requires $66,000 in pretax annual operating costs. Calculate the NPV for both conveyor belt sys..

Within a hierarchical database : Within a hierarchical database, what is the name for the built-in linkages in data tables? Which data relationships can be contained in a hierarchical database?

Research paper - attachment theories : Attachment or lack of attachment is one of the several psychological issues that can affect our behaviors from childhood to death. Attachment behavior issues link into parenting styles and trust versus mistrust issues

Design an address decoding circuit : 9.Design an address decoding circuit for the following 68HC11 system: 8KB EPROM starting at address $E000

Depreciation tax shield : Fill in the missing numbers for the following income statement. (Input all amounts as positive values. Do not round intermediate calculations.) Sales $ 676,900 Costs 431,800 Depreciation 104,400 EBIT $ Taxes (35%) Net income $ Calculate the OCF. OCF ..

User Account

All Pages