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Bridgton Golf Academy is evaluating different golf practice equipment. The Dimple-Max equipment costs $104,000, has a three-year life, and costs $8,600 per year to operate.
Bridgton Golf Academy is evaluating different golf practice equipment. The Dimple-Max equipment costs $104,000, has a three-year life, and costs $8,600 per year to operate. The relevant discount rate is 10%. Assume that the straight-line depreciation method is used and that the equipment is fully depreciated to $0. Furthermore, assume the equipment has a salvage value of $20,000 at the end of the projects life. The relevant tax rate is 28%. All cash flows occur at the end of the year. What is the equivalent annual cost (EAC) of this equipment?
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