What is the equivalent annual savings from the purchase

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Reference no: EM131150072

Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball for $210,000 and sell its old low-pressure glueball, which is fully depreciated, for $38,000.

The new equipment has a 10-year useful life and will save $46,000 a year in expenses.

The opportunity cost of capital is 11%, and the firm's tax rate is 40%.

What is the equivalent annual savings from the purchase if Gluon uses straight-line depreciation? Assume the new machine will have no salvage value. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131150072

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