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What is the equivalent annual cost of this equipment

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Question - Equivalent Annual Cost Bridgton Golf Academy is evaluating new golf practice equip-ment. The "Dimple-Max" equipment costs $97,000, has a 3-year life, and costs $10,600 per year to operate. The relevant discount rate is 12 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 $7,500 at the end of the project's life. The relevant tax rate is 23 percent. All cash flows occur at the end of the year. What is the equivalent annual cost (EAC) of this equipment?

Reference no: EM133188593

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