Question: Priority Shipping LLC is considering purchasing new equipment for $1,000,000. The equipment is has a five-year life and has an expected salvage value of $100,000

Priority Shipping LLC is considering purchasing new equipment for $1,000,000. The equipment is has a five-year life and has an expected salvage value of $100,000 at the end of its life. The equipment will be depreciated straight line to zero. The new equipment will cost $150,000/year to operate and the relevant discount rate is 10%.

Tax rate = 30%

Calculate EAC.

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