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You are analyzing the purchase of an industrial vacuum cleaner. It will last for five...

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Accounting

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You are analyzing the purchase of an industrial vacuum cleaner. It will last for five years and it costs $100,000. The pretax operating costs of the cleaner are $26857 per year. Use straight-line depreciation to zero over the five years and assume a before-tax market salvage value of $20,000 at the end. Your tax rate is 21 percent and the relevant discount rate is 5 percent. What is the Equivalent Annual Cost (EAC)? Select one: O a. $34465 b. $35545 c. $40395 O d. $37255 O e. $29198

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