Peyton Manufacturing is trying to decide between two different conveyor belt systems. System A costs $208,000, has a fou

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Peyton Manufacturing Is Trying To Decide Between Two Different Conveyor Belt Systems System A Costs 208 000 Has A Fou 1 (61.52 KiB) Viewed 56 times

Peyton Manufacturing 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. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 23 percent and the discount rate is 8 percent. Calculate the EAC for both conveyor belt systems. (Your answers should be negative values and indicated by minus signs. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) System A System B Which conveyor belt system should the firm choose? System A