Bottoms Up Diaper Service is considering the purchase of a new industrial washer

Question

Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $8,500 and sell its old washer for $4,500. The new washer will last for 5 years and save $2,200 a year in expenses. The opportunity cost of capital is 14%, and the firm%u2019s tax rate is 30%. What is the equivalent annual cost of the washer, if the firm uses straight-line depreciation? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Explanation / Answer

3372.35

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