What kind of receiver do I need?

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Hi markow - a few questions to get you started:

What are the dimensions of the room?
What model speakers and subwoofer to you intend to purchase?
Is this system primarily for music, or you plan on watching TV and movies as well?
What model CD player or turntable do you own?
Have you budged for cabling?

Here are some models that may meet your budget if you hunt around:

Yamaha RXV-V659 or HTR5960
Denon AVR-1707 or AVR-687

The Yamaha RXV Series and Denon AVR-1707 are sold at specialized retailers, where you may have more flexibility in negotiating price. The Yamaha HTR Series and Denon AVR-687 are sold at big box retailers such as FutureShop and BestBuy. The models are almost identical.

Also, don't pay attention to the wattage in this price range. The $229 Yamaha you were looking at isn't likely to achieve more than 25-30w per channel with all channels driven.