Question:
Eads Industrial Systems Company (EISC) is trying to decide between two different conveyor belt systems. System A costs $429,000, has a 3-year life, and requires $117,000 in pretax annual operating costs. System B costs $525,000, has a 5-year life, and requires $77,000 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. If the tax rate is 33 percent and the discount rate is 16 percent, the NPV for project A is $ and the NPV for project B is $ . Therefore, the firm should choose project A or B . (Negative amount should be indicated by a minus sign. Round answers to 2 decimal places, e.g. 32.16.)