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(a) TTM is evaluating different golf practice equipment. The Super-Max equipment costs $90,000. It costs $10,000 to operate each year and has three years of
(a) TTM is evaluating different golf practice equipment. The "Super-Max" equipment costs $90,000. It costs $10,000 to operate each year and has three years of life. The straight-line method of depreciation is used and the equipment is fully depreciated to zero over 3 years. The equipment will have a salvage value of $20,000 at the end of the project's life. The relevant tax rate is 30%. The relevant discount rate is 12%. You are required to calculate Tax savings on depreciation each year Tax payment on salvage value (iii) NPV (iii) The equivalent annual cost (EAC) of this equipment
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