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Sheep Ranch Golf Academy is evaluating new golf practice equipment. The "Dimple-Max" equipment costs $125,000, has a 6-year life, and costs $9,600 per year to operate. The relevant discount rate is 9 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 $9,300 at the end of the project’s life. The relevant tax rate is 24 percent. All cash flows occur at the end of the year. What is the equivalent annual cost (EAC) of this equipment?
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