How to achieve the equivalent annual savings

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Please explain how to achieve the equivalent annual savings from the purchase if Gluon uses straight-line depreciation with no salvage value.

Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball for $180,000 and sell its old low-pressure glueball, which is fully depreciated, for $32,000. The new equipment has a 10-year useful life and will save $40,000 a year in expenses. The opportunity cost of capital is 8%, and the firm's tax rate is 40%.

Reference no: EM132404412

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