Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball for $170,000 and sell its old low-pressure glueball, which is fully depreciated, for $30,000. The new equipment has a 10-year useful life and will save $38,000 a year in expenses. The opportunity cost of capital is 11%, and the firm’s tax rate is 21%. What is the equivalent annual saving from the purchase if Gluon can depreciate 100% of the investment immediately?

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

A: Calculation of equivalent annual savings: Answer: Equivalent annual savings is $14,777.60…

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

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Q: What is the equivalent annual saving from the purchase if Gluon can depreciate 100% of the…

A: Given information is: Gluon Inc. is considering the purchase of a new high pressure glueball. It can…

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

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Q: What is the equivalent annual saving from the purchase

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