New to HiFi, need digital advice.


I am not an audiophile but I recently acquired a really nice high end system for free. (AR LS16 preamp, Madrigal Proceed HPA2 amp, Arcam CD92 CD player, Aerial Acoustics 7B tower speakers.  I have been learning as much as I can over the last week since I got it.

Now I'm trying to figure out how to put together a decent but not necessarily high end digital input system for as little money as possible.

So here is my plan. I know it is not high end and probably not commensurate with my system but hopefully will meet my needs:

Old iMac using iTunes to manage flac or alac files plugged into Schiit Modi 2 via USB cable and then into preamp via USB cable. I can us Apple's remote app on my iPhone to select/play music remotely (Works great).

Does this sound reasonable? If so it will only cost me about $100 for the Schiit DAC and $25 for a decent set of RCA cables (already purchased) and whatever I might need to spend on the USB cable. Anything I should know about the USB cable for this?

Thanks for the advice and apologies for my ignorance in all of this.

George
n80
Okay, I get it all the way up to the point that I plug the Toslink cable into the pre-amp. My pre-amp is an AR LS16 tube model. The only input is XLR or RCA. Does a DAC need to go in between?

Don't feel like you have to coach me through this. I know I'm hopelessly ignorant in all this. I can continue to do the necessary leg work. 

And thanks for all the help so far.
n80, I don't think anybody here has a problem sharing their knowledge to another member.

Yes, the Toslink is carrying a digital signal and needs to be converted by a DAC. Then the analogue output goes to the preamp.

So does the Toslink via the headphone jack to DAC provide any benefit over USB to DAC?
I can give you a simplified explanation and let others who are more familiar with computer audio chime in, but I know the USB interface carries’s a 5V power signal along with the data. Since the power is traveling down the same cable as the all important data, noise can be introduced into the data stream (the music).
There are devices used to clean up the noise, one is known as a "decrapifier," and the end result is cleaner data to be used when imported to the audio components.
There is also the issue of "jitter" which is the timing of the digital stream travelling from point A to point B. That’s why a DAC needs an internal or external clock device to correct the timing of the data stream. Basically, computers and analogue music systems are not a perfect fit.
TOSLINK is an interface that was designed for AV transmission, while USB was designed for data use (not audio). It is a light source carrying the signal thru fiber optic strands encased in a cable.
The highest quality cable which is recommended for audio use is a glass fiber cable. This provides the cleanest signal.
I believe one of the benefits of optical is there are no problems with grounding issues as found in other formats.

There is a downside to Toslink in that it doesn’t have the bandwidth to carry DSD audio, but can transmit hires PCM.

I recommend searching the Audiogon archives for info about both interfaces. USB is more popular, especially since technological advances have made it suited to use in high quality audio systems.