Problem
Pevton Manufacturing is trying to decide between two different convevor belt svstems. System A costs $212,000, has a four-year life, and requires $68,000 in pretax annual operating costs. System B costs $300,000, has a six-year life, and requires $62,000 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 system is chosen, it will not be replaced when it wears out. The tax rate is 22 percent and the discount rate is 9 percent. Calculate the NPV for both conveyor belt systems.