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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 $2.1 million to install, but only $8,000 per year to operate. The precipitation equipment has an operating life of eight 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. Which system should the company select if the cost of capital is 12% and the tax rate is 40%? Ignore the half-year rule. We calculated the EAC for the filtration system in class. For your assignment, calculate the EAC for the precipitation system. (4 marks)