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Bills initial investment in his trailer home was $35,000. Bill decided to depreciate his home using the straight-line method over the next 7 years. However,
Bills initial investment in his trailer home was $35,000. Bill decided to depreciate his home using the straight-line method over the next 7 years. However, the investment life is only 4 years. What is the present value of the tax savings from depreciation over the investment life? The marginal tax rate is 20% and the after-tax risk adjusted discount rate is 10%.
a. $35,000
b. $3,169.87
c. $1,000
d. $5,000
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