Problem:
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $8,500 and sell its old washer for $4,500. The new washer will last for 5 years and save $2,200 a year in expenses. The opportunity cost of capital is 14%, and the firm's tax rate is 30%.
Required:
Question: What is the equivalent annual cost of the washer, if the firm uses straight-line depreciation?
Note: Please provide full description.