Do I need a DAC?

Format cannot make any difference as long as it is lossless (bit perfect). Information is transferred as data in packets over Wi-Fi without timing. Timing (clock) is recreated in AE. If you ever decide to use lossless then perhaps the best format is ALAC since Itunes uses it to transfer data to AE, otherwise it has to compress to ALAC - additional operation but it doesn't make any difference because your computer is fast enough anyway (ALAC saves you disk space). I use jitter suppressing Benchmark DAC1 with AE but sound of Benchmark might be not to you liking (neutral and not warm). Combination is as clean as it gets.

I have to warn you that since clock is recreated in AE, without music clock drops. As a result of that some DACs "eat" beginning of each song with AE. Remedy is to use "crossfade" in Itunes. My Benchmark DAC1 is fast enough to sync again but you might scan this forum to find out if the problem exists with particular DAC that you have in mind before investing money.

>256kbps is very good and you'll notice big difference with DAC. Additional reclocker should give you a little more, even with 256kbps.

"Zd542: So in your opinion, a DAC isn't needed as long as I mostly play 256/320kbps files from iTunes?"

Maybe. I think a better way to put it is that you will get more out of a new dac if you are feeding it better quality music. Even playing mp3's through a new dac, though, will probably sound better just because of the fact that the analog portion of the unit will be of a much better quality.

In my first post, I recommended that you try bypassing the preamp section of your NAD. I would try it if you haven't already done so. Seeing how big the difference and what the difference is, may give you some insight on how to proceed.

You could always just try a DAC and see if it does anything for you. Amazon sells several, to include Peachtree, Schiit, Musical Fidelity, etc. Just check the return policy for the vendor that you buy from. I believe that Wyred4Sound has a home trial program as well.

If you have the money to spend, I really don't think that getting a decent DAC can be a bad choice. It's more than likely that you will get at least some improvement. The question is one of how much.

As has been mentioned, you have a decent integrated and good speakers. All it would take for you to really get a bit more enjoyment out of the system would be to get a DAC and rip your CDs in a lossless format.

I'm not an audiophile and don't chase incremental increases in quality (although I'll take them if they pop up), but I never realized how enjoyable listening to music can be until I heard it through a decent system.

MDHT Labs is the best Dac in 300-500 dolars price range.

You will be very surprise by the sound. Usually a 300-1000 dollars DAC will NOT make a lot of difference. BUT this MDHT Labs DAC is different.

I tried the Musical fidelity $800 DAC and had to return it the next day.

I tried the MDHT Labs and really surprise by its wider and larger soundstage.

Oscarrr, I have enjoyed this thread as I have many friends considering the same. You have garnished a great deal of input, most of which I agree.

1)Driving a DAC with the AE via SPDIF would be an improvement.
2)A computer playing WAV or AIFF quality files into a DAC would be additional improvement.
3)There are many DACs available (new or used) that would satisfy your needs.

As a further thought:

There are a number of DACs that came into the marketplace ~5-7 years ago that were and still are very good DACs. Their weak link has been the USB input if indeed one is provided. Given that the AE outputs SPDIF you can avoid the USB input on one of these older DACs. They often sell used for 30-50% of original retail. The Cambridge Dacmagic might be a place to start. Has 2 coaxial SPDIF inputs, which many do not, and this can come in handy for other sources. Should be able to get a used one for ~$250. The Musical Fidelity V-DAC could be bought used for less than $180. PS DL III for ~$350 - $400. You can keep a used DAC around for a year or two, resale it at a reasonable % of your cost, upgrading later after exploring the marketplace.