SGS Golf Academy is evaluating different golf practice
equipment. The "Dimple-Max" equipment costs $110,000, has a 5-year
life, and costs $10,200 per year to operate. The relevant discount
rate is 13 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 $26,000 at
the end of the project’s life. The relevant tax rate is 34 percent.
All cash flows occur at the end of the year. What is the EAC of
this equipment? (Your answer should be a
negative value and 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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