Sheep Ranch 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.)

Sheep Ranch 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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Description: 13Sheep Ranch 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 deprecia

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 9P

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