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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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.