Why a separate DAC?

@gdrnBob I agree the DAC technology is changing quickly. I believe that I can use the Yamaha CD as output to DAC. @soix I really appreciate your advice on the try and buy. Thanks!

I am streaming TIDAL hard wired CAD6 from my modem in my family room to my Apple TV in the living room and have the Apple TV hardwired to my ARCAM AVR550.  I just found out I have not been even hearing 16 bit quality sound.  ARCAM makes a streamer that sells for $250.  Wonder if this can really play 16 bit and 24 bit.

I agree with the person who said he streams TIDAL.  Can't understand why anyone would spend the money on CD's anymore.  TIDAL is really so convenient.

DAC signal decoder may be an upgrade or may not. I recommend you choose a DAC signal decoder with multibit chip (sometimes called R2R) and a significant power supply, it is best to have no opamp in the audio sequence.
https://hdradio.vn/bo-giai-ma-dac/

There are several factors into building into a quality sounding dac ,
it is not just about the dac chipsets. My BurrBrown 1792 chipsets in my Belcanto  2.7 dac sound betterthen many that sell for much more money the powersupplies,and isolation is very important ,
as well as the word clocks which mine have Dual Femto clocks 
which is class leading coming from a designer that has over 25 years working with digital ,as well as having his roots in Vacuum tubes and designs his Sonics with that in design .by having a seperate dac it can have the isolation needed as welssthe parts quality . http://www.belcantodesign.com/home/eone/dac-2-7/

OCG HiFi (you tube channel) just compared 15 different DACs from $850- 23k+ 

I am currently using a Audio Alchemy DDP-1 (preamp/dac) + AS 5 (outboard power supply) It's a freakin bargain. No loner available new as AA introduced a new line, but I have seen the combo (the PS 5 is a must) used for $1700. Jump on that