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A company is trying to decide between two different conveyer belt systems. System A costs $268,000, has a four year life, and requires $82,000 in pretax annual operating costs. System B costs $378,000, has a six year life, and requires $76,000 in pretax annual operating costs. Assume the tax rate is 35% and the required return is 10%. Calculate the equivalent annual cost for both systems. Which system should the company choose?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92855792

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