Biggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and costs $0.01 per sheet to print and will last 4 years. The printer will have zero salvage value and will be fully depreciated using straight-line depreciation over its expected life. The tax rate is 21% and the appropriate discount rate is 14%. Biggerstaff Automotive Group prints approximately 22,000 sheets annually and the printing costs are an operating expense of the firm. What is the equivalent annual cost associated with Printer 1?

Biggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and costs $0.01 per sheet to print and will last 4 years. The printer will have zero salvage value and will be fully depreciated using straight-line depreciation over its expected life. The tax rate is 21% and the appropriate discount rate is 14%. Biggerstaff Automotive Group prints approximately 22,000 sheets annually and the printing costs are an operating expense of the firm. What is the equivalent annual cost associated with Printer 1?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 9P

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