Biggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and costs $0.01 per sheet to print and will last 4 years. The printer will have zero salvage value and will be fully depreciated using straight-line depreciation over its expected life. The tax rate is 21% and the appropriate discount rate is 14%. Biggerstaff Automotive Group prints approximately 22,000 sheets annually and the printing costs are an operating expense of the firm. What is the equivalent annual cost associated with Printer 1?
Biggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and costs $0.01 per sheet to print and will last 4 years. The printer will have zero salvage value and will be fully depreciated using straight-line depreciation over its expected life. The tax rate is 21% and the appropriate discount rate is 14%. Biggerstaff Automotive Group prints approximately 22,000 sheets annually and the printing costs are an operating expense of the firm. What is the equivalent annual cost associated with Printer 1?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 9P
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Biggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and costs $0.01 per sheet to print and will last 4 years. The printer will have zero salvage value and will be fully depreciated using straight-line depreciation over its expected life. The tax rate is 21% and the appropriate discount rate is 14%. Biggerstaff Automotive Group prints approximately 22,000 sheets annually and the printing costs are an operating expense of the firm.
What is the equivalent annual cost associated with Printer 1?
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