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SGS Golf Academy is evaluating different golf practice equipment. The "Dimple-Max" equipment costs $106,000, has a 4-yea...

SGS Golf Academy is evaluating different golf practice equipment. The "Dimple-Max" equipment costs $106,000, has a 4-year life, and costs $9,800 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 $24,000 at the end of the project’s life. The relevant tax rate is 39 percent. All cash flows occur at the end of the year. What is the EAC of this equipment?

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Answer #1

Solution :

The EAC of this equipment is = -$ 25,928.41

= - $ 25,928 ( when rounded off the nearest whole number )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

28.10.2019 Microsoft Excel _ Si FILE НОМE INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW A B C D Е F G Н K М N 1 Statement show

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