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Bridgton Golf Academy is evaluating new golf practice equipment. The "Dimple-Max" equipment costs $104,000, has a...

Bridgton Golf Academy is evaluating new golf practice equipment. The "Dimple-Max" equipment costs $104,000, has a 5-year life, and costs $8,900 per year to operate. The relevant discount rate is 10 percent. Assume that the straight-line depreciation method is used and that the equipment is fully depreciated to zero. Furthermore, assume the equipment has a salvage value of $7,900 at the end of the project’s life. The relevant tax rate is 22 percent. All cash flows occur at the end of the year. What is the equivalent annual cost (EAC) of this equipment? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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Expert Solution

Use spreadsheet for the ease in computations. Enter values and formulas in the spreadsheet as shown in the image below.

The obtained result is provided below.

jeff jeffy answered 1 year ago
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