Gluon Inc. is considering the purchase of a new high-pressure glueball. It can purchase the glueball for $80,000 and sell its old low-pressure glueball, which is fully depreciated, for $14,000. The new equipment has a 10-year useful life and will save $18,000 a year in expenses. The opportunity cost of capital is 10%, and the firm’s tax rate is 21%. What is the equivalent annual saving from the purchase if Gluon can depreciate 100% of the investment immediately?
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Gluon Inc. is considering the purchase of a new high-pressure glueball. It can purchase the glueball...
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