Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball

Question:

Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball for $70,000 and sell its old low-pressure glueball, which is fully depreciated, for $12,000. The new equipment has a 10-year useful life and will save $16,000 a year in expenses. The opportunity is 9%, 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
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