Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $6,000 and sell its old washer for $2,000. The new washer will last for 6 years and save $1,500 a year in expenses. The opportunity cost of capital is 16%, and the firm's tax rate is 40%. What is the equivalent annual cost of the washer if the firm uses straight-line depreciation?

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Cost of new washer Sales price of old washer Life of new washer Savings in expenses Opportunity cost of capital Tax rate (XX)-(X) 6.00 years S1,500.00 16.00% 40.00%