Your company is considering a new project that will require $2,000,000 of new equipment at the start of the project. The
Posted: Sun May 29, 2022 6:34 pm
Your company is considering a new project that will require
$2,000,000 of new equipment at the start of the project. The
equipment will have a depreciable life of 10 years and will be
depreciated to a book value of $250,000 using straight-line
depreciation. The cost of capital is 12 percent, and the firm's tax
rate is 21 percent. Estimate the present value of the tax benefits
from depreciation. Multiple Choice
a)$68,250
B)$207,646
c)$175,000
d) $988,789
$2,000,000 of new equipment at the start of the project. The
equipment will have a depreciable life of 10 years and will be
depreciated to a book value of $250,000 using straight-line
depreciation. The cost of capital is 12 percent, and the firm's tax
rate is 21 percent. Estimate the present value of the tax benefits
from depreciation. Multiple Choice
a)$68,250
B)$207,646
c)$175,000
d) $988,789