What exactly does a DAC do?


I have a NAD cd/dvd player that I really kinda like, but I would like better audio for stereo listening, but I have I some very fundamental questions for any patient souls out there.

1. What does a DAC do?

2. What is a transport? Is there such thing as a pure transport?

3. Would a DAC be beneficial in my rig?

4. Would a standard DAC work w/SACD, if I upgraded later.

Any input is appreciated. Google is not smiling upon me.
dubzilla
Above responses on the money but I will add one contrary opinion. Due to the steep "obselescence (sp?)" factor in digital and the way that many audiophiles are early adopters, older, but very good DACs can be available for about 25% of retail. Muse Model 2 for about $500, Classe' DAC-1 or Muse 296 for under $1K. If you have a modest system and want to get a taste of real high end, try the Muse Model 2 and a decent digital cable (assumming your NAD has a digital out, otherwise you will need a whole new player). You will, I think, be floored. NAD makes some pretty good stuff and I have bought many of their products over the years, but getting a good DAC or even a good used player (Sony 9000 ES or Elite DV-09 maybe at about $600) would probably be a big upgrade.
I would not recommend older DAC's. DAC technology has come a long way in the last 2 years, particularly with upsamplers. Used ones are available and can be modded.
Are there any *affordable* (under 1k) DAC's you'd suggest, Audioengr?

Those Muses look really good, btw, Swampwalker.

Thanks for the heads up everybody.
I strongly disagree with jfrech, agree with audioengr and disagree with swampwalker.

Look around?? the new Inexpensive DAC revolution is upon us and they all sound good to great.

Modded P.T.3A
Modded Art DI/0 130.00 to 650.00

aDac 350.00 to 525.00
Scott Nixon tube dac 250.00 to 550.00
Channel Island appr. 450.00 inc PS

and a couple more, going used? Bel Canto DAC1 or 2

Prices range from 250.00 up to and probably above your budget for the PT modded.

Modest CDPs have modest crummy DACs, simple........