SGS Golf Academy is evaluating different golf practice equipment. The "Dimple-Max" equipment costs $140,000, has a 4-year life, and costs $9,200 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 $21,000 at the end of the project’s life. The relevant tax rate is 21 percent. All cash flows occur at the end of the year. What is the EAC of this equipment? Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
SGS Golf Academy is evaluating different golf practice equipment. The "Dimple-Max" equipment costs $140,000, has a 4-year life, and costs $9,200 per year to operate. The relevant discount rate is 13 percent. Assume that the straight-line
Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Equivalent annual cost refers to teh cost which is incurred for owning, operating, and the maintenance of an asset in its entire life time. which is helpful for companies in taking decisions related to capital budgeting.
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