Description of this paper

Loading

Comparing mutually exclusive projects. Kingsmill industrial-(Answered)

Description

Instant Solution ? Click "Buy button" to Download the solution File


Question

Comparing mutually exclusive projects. Kingsmill industrial systems company (KISC) is trying to decide between different conveyor belt systems. System A costs $360,000, has a four year life, and requires $135,000 in pre-tax annual operating costs. System B costs $430,000, has a six-year life, and requires $98,000 in pre-tax annual operating costs. Both systems are to be depreciated at 30% per year (Class 10) and will have no salvage value. Whichever project is chosen, it will not be replaced when it wears out. If the tax rate is 34% and the discount rate is 12%, which project should the firm choose? Conduct the analysis and offer a brief recommendation.


Comparing mutually exclusive projects. Kingsmill industrial systems company (KISC) is trying to decide

 

between different conveyor belt systems. System A costs $360,000, has a four year life, and requires

 

$135,000 in pre-tax annual operating costs. System B costs $430,000, has a six-year life, and requires

 

$98,000 in pre-tax annual operating costs. Both systems are to be depreciated at 30% per year (Class 10)

 

and will have no salvage value. Whichever project is chosen, it will not be replaced when it wears out. If

 

the tax rate is 34% and the discount rate is 12%, which project should the firm choose? Conduct the

 

analysis and offer a brief recommendation.

 


 

 

Paper#9210199 | Written in 27-Jul-2016

Price : $19
SiteLock