Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gluon Incorporated is considering the purchase of a new high pressure glueball. It can purchase the glueball for $ 8 0 , 0 0 0

Gluon Incorporated is considering the purchase of a new high pressure glueball. It can purchase the glueball for $80,000 and sell its old low-pressure glueball, which is fully depreciated, for $14,000. The new equipment has a 10-year useful life and will save $18,000 a year in expenses before tax. The opportunity cost of capital is 10%, and the firm's tax rate is 21%. What is the equivalent annual saving from the purchase if Gluon can depreciate 100% of the investment immediately.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Answer is complete but not entirely correct.
Equivalent annual savings
$,5,252.45
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Behavioral Finance And Asset Prices

Authors: David Bourghelle, Pascal Grandin, Fredj Jawadi, Philippe Rozin

1st Edition

3031244850, 978-3031244858

More Books

Students also viewed these Finance questions