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Bridgton Golf Academy is evaluating new golf practice equipment. The \"Dimple-Max\" equipment costs $138,000, has a...

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Finance

Bridgton Golf Academy is evaluating new golf practice equipment.The \"Dimple-Max\" equipment costs $138,000, has a 4-year life, andcosts $13,800 per year to operate. The relevant discount rate is 12percent. Assume that the straight-line depreciation method is usedand that the equipment is fully depreciated to zero. Furthermore,assume the equipment has a salvage value of $11,500 at the end ofthe project’s life. The relevant tax rate is 25 percent. All cashflows occur at the end of the year. What is the equivalent annualcost (EAC) of this equipment? (A negative amount should beindicated by a minus sign. Do not round intermediate calculationsand round your answer to 2 decimal places, e.g.,32.16.)

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Solution The equivalent annual    See Answer
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