What is the equivalent annual cost of this equipment

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Reference no: EM13271675

Bridgton Golf Academy is evaluating different golf practice equipment. The "Dimple-Max" equipment costs $95,000, has a 4 year life, and costs $8,700 per year to operate. The relevant discount rate is 13 percent. Assume that the straight-line depreciation method is used and that the equipment is fully depreciated to zero. Furthermore, assume the equipment has a salvage value of $18,500 at the end of the project's life. The relevant tax rate is 35 percent. All cash flows occur at the end of the year. What is the equivalent annual cost (EAC) of this equipment?

Reference no: EM13271675

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