Question 4 You are evaluating two different pollution control devices: (a) A filtration system which costs $1.1 million to install and $60,000 annually to operate. It would have to be replaced every five years. (b) A precipitation system which costs $2 million to install and $9,000 per year to operate. The precipitation equipment has a useful life of nine years. The company rents its factory and both systems are considered leasehold improvements so straight- line capital cost allowance is used throughout, and neither system has any salvage value. Ignore the half-year rule. The cost of capital is 12% and the tax rate is 40%. We calculated the EAC for the filtration system in class. For your assignment, based on the facts above, calculate the EAC for the precipitation system. Which system should the company select? (4 marks)