Best budget DAC

Does the nad cd player have inputs so you can use it as a dac for computer files? If it does I would question if a stand alone dac in this price range would be better than the one in the cd player. Perhaps consider holding off until you can purchase a dac in a higher bracket? For me in your price range i love my usb halide dac hd which has a very small footprint and no power cable. But input is usb only. 

As to your question yes files ripped from cds can sound great. "Better" is a matter of your cd player vs dac vs file types - basically comparing your overall implementation for reduced jitter, good conversion, etc. Look at the threads on ripping software before you get started. 

Check out the iFi line if you just need to use USB from a computer.  No frills but very good sound using the Sabre line of chips.  

In terms of relative quality to using a CD player, it depends a lot on the CD player you have and the computer you use (and the software).  Check out computeraudiophile.com for a number of different excellent computer configurations for digital audio.  I have truly found that eliminating moving and spinning parts (drives, fans, pumps) and going with a low wattage/heat system can make a significant difference in the sound.  You also don't want that computer doing anything else than playing the music.  

I second the Peachtree.  I am very happy with it 

Second the IFI recommendation. Only one of their products uses the Sabre chip though, the Micro idac, and it's no longer in production. It's been replaced by the Micro Idac2, which, like the rest of the line, uses a TI( Burr Brown chipset ). I have both the Nano IDSD Dac, and the new Micro IDac2, and they both are big overachievers for the money. the new Micro is definitely a big improvement over the Nano. In direct comparisions to my Weiss DAC202 via firewire ( USB of course on the IFI stuff ), they were not embarassed. The weiss was clearly superior, but I could live happily ever after with either IFI. Some very serious and clever engineering and implementation going on.

Now my experiences of CD spinners vs ripped files. Unless you've got a SOTA CD playback system, a properly utilized and set up computer system playing uncompressed files will win the shootout every time. But it's not a trivial task to do properly. I have two computers that I use. A Windows laptop running JRMC and JPlay and a Mac Mini used as a dedicated music server with either Amarra or Bit Perfect. It takes a lot of time and work to get a good computer system w/ the proper software up and running, but the results, if done properly, will get you past what a dedicated CD player will give you.

Now the CD player vs. transport/DAC question. Unless its a very cheap CD player, in most cases you will do better sticking with the player vs a transport/DAC for a couple of reasons. In a dedicated CD player, the movements of the digital signals in the player have been carefully laid out and the layout designed by a competent engineer. In addition, all of the power supplies have been designed to keep noise down. Bad layout and noise in digital equipment increase jitter, which is the biggest bane of digital audio. In a separate transport/DAC set-up, getting the digital out from the transport to the spdif or AES/EBU receiver on the DAC also is no trivial matter, and is subject to the possibility of very increased amounts of jitter if done wrong due to impedance mismatches, mostly in the cable that connects the units. It's just not a plug and play option.

Just an FYI. When you convert CD files to a higher resolution you are performing very complex mathematical computations, and the resulting sound quality will greatly depend on the software used. Of course, YMMV, but , for me, I have found this method to produce superior results.

When you convert your files, don't do it on the fly, but convert first and store the converted file on your hard drive, then play back the converted file. It saves computer resources as the computer doesn't have to convert the file while its also playing it, and I have found it to make a difference.

Also, in my experience, and of course YMMV, always convert your CDs to files using a whole number multiplier of the sampling rate. I.E., convert your 16/44.1 CD files to 24/ either 88.2 or 176.4 files. My JRMC program has an excellent upsampler, and the converted files sound just very slightly smoother and less harsh to my ears on my IFI DACs. I can't tell the difference on my Weiss DAC202 nor my Auralic Vega. This is only a guess, but both the Wiess and Auralic use the Sabre chip, which internally upsamples all incoming signals to 1.5 megahertz, and I'm guessing that the chips high sample rate swamps any changes in the original files. The IFI units, on the other hand, perform no internal upsampling and remain bit-perfect, which is why I can hear the very minor changes to the upsampled files on them. A guess of course. I'm no engineer.

I agree w/ the observations of JJI666 above. For me a computer is the only way to go, and as he stated, the software is critical. Having it dedicated also helps, except that JPlay on a Windows machine greatly mitigates that factor. A Windows 10 laptop w/ JPlay is, in my opinion and experience, the closest you can get to a dedicated computer as a music server w/o actually having one.

Of course, the usual disclaimer applies here. I'm no authority or whiz-bang at this stuff, I've just been at it a while and tried a lot of different hardware and software variables to get where I'm at. It took a lot of time and work, but if you're willing to spend it, a computer as a source feeding a USB DAC, can very significantly outperform all but the best dedicated CD players.

Cheers, and enjoy the music.

Crazy Bill

It will be very hard to beat the Parasound Zdac for a budget product.  Should be able to get a demo with warranty for around $300 or perhaps less for used.