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The Tempo Golf and Country Club in London, Ontario, is evaluating two different irrigation system options. An underground automatic irrigation system will cost $ 9
The Tempo Golf and Country Club in London, Ontario, is evaluating two different irrigation system options. An underground automatic irrigation system will cost $ million to install and $ pretax annually to operate. It will not have to be replaced for years. An aboveground system will cost $ million to install, but $ per year to operate. The aboveground equipment has an effective operating life of nine years. The country club leases its land from the city and both systems are considered leasehold improvements; as a result, straightline capital cost allowance is used throughout ignore the Accelerated Investment Incentive in this problem and neither system has any salvage value. The tax rate is
Calculate the equivalent annual cost for each method if we use a discount rate? Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to decimal places. Negative answers should be indicated by a minus sign. Omit $ sign in your response.
tableMethodEAC,Underground system,$Aboveground system,$
Which method should we select?
Aboveground system
Underground system
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