University of Texas is considering purchasing a power supply system. The system costs $300,000, has a useful life of 10 years, and will cost $20,000 per year to keep running. The system uses straight line depreciation and the salvage value is zero at the end of year 10. The tax rate is 30% and cost of capital is 12%. What is the (after taxes) equivalent annual cost of the battery?

Question 11 options:

1)

$58,095

2)

$58,879

3)

$59,762

4)

$60,092

5)

$61,891

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