Two different conveyor belt systems


Question: Eads Industrial System Company [EISC] is trying to decide between two different conveyor belt systems. System A costs dollar 430,000, has a four year life, & requires dollar 140,000 in pretax annual operating costs. System B costs dollar 570,000, has a six year life, & requires dollar 89,000 in pretax annual operating costs. Both systems are to be depreciated straight -line to zero over their lives & will have zero salvage value. EISC always needs a conveyor belt system; when one wears out, it must be replaced. If the tax rate is 30% & the discount rate is 19%, the EAC for project A is dollar ________ & the EAC for project B is dollar ________. Therefore, the firm should choose project_________. [Negative value should be indicated by a minus sign. Give your answer to two decimal places]

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Finance Basics: Two different conveyor belt systems
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