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Question: You are considering two different systems for pollution control. System I costs $875,000, has a 9 year life, and has pre-tax operating costs of $15, 750 per year. System II costs was $665,000, has a six year life, and has pre-tax operating costs of $39,000 per year. For both systems use straight line depreciation and assume neither system has any salvage value. If your tax rate is 39% and your discount rate is 12%, which do you prefer? Show me with calculations.

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