Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $280,000, has a four-year life, and requires $85,000 in pretax annual operating costs. System B costs $360,000, has a six-year life, and requires $79,000 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 project is chosen, it will not be replaced when it wears out. The tax rate is 23 percent and the discount rate is 10 percent.

We have to calculate the EAC for both the conveyor belt system.

Solutions :

Equivalent Annual Cost or (EAC) for the SYSTEM-A

tax rate )

                               = $ 49,350

Year      Annual Cost flow     Present value factor    Present Value of Annual

                                                     at 10%                              cash flow

1                    -49,350                  0.909091                          -44,863.64

2                  -49,350                   0.826446                          -40,785.12

3                   -49,350                  0.751315                            -37,077.39

4                   -49,350                 0.683013                         -33,706.71  

     Total                                    $ 3.169865                       $ -156,432.86  

Therefore, Net Present value = present value of the annual cash flow - initial investment.

           = 156,432.86 - 280,000

          = $ 436,432.86 (negative)

Now the EAC or the Equivalent Annual Cost for System A :

        dollar (negative)

tax rate)

= -$ 47,030

Year      Annual Cost flow     Present value factor    Present Value of Annual

                                                     at 10%                              cash flow

1                    -47,030                  0.909091                          -42,754.55

2                  -47,030                   0.826446                          -38,867.77

3                   -47,030                  0.751315                           -35,334.34

4                   -47,030                 0.683013                            -32,122.12

5                  -47,030                  0.620921                            -29,201.93

6                  -47,030                 0.564474                            -26,547.21  

    Total                                     $ 4.355261                       $  -204,827.91

Net Present Value = Present Value of annual cash inflows – Initial Investment

= -$ 564,827.91 (negative)

EAC for system B:

Equivalent Annual Cost for system B

= -$129,688.66 (negative)

he used the algebra tiles correctly.

step-by-step explanation:

given : 3x(2x-1)

solution :

since he used algebra tiles .

armando's solution is the same in the solution shown in figure

as he distributed 2x into x and x and wrote them vertically

and also write   -1 vertically

and 3x into x and x and x and wrote it horizontally

performing the multiplication in the algebra tiles we get

and solving the given expression :

3x(2x-1)

since solving the expression using tiles   and solving the expression algebraically we get the same answer

thus   we can choose the first statement as the answer to this problem which is "he used the algebra tiles correctly".