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Exercise A-13 (Algo) Present Value of Cash Flows Rush Corporation plans to acquire production equipment for $602,500 that will be depreciated for tax purposes as
Exercise A-13 (Algo) Present Value of Cash Flows Rush Corporation plans to acquire production equipment for $602,500 that will be depreciated for tax purposes as follows: year 1. $120,500; year 2,\$210,500; and in each of years 3 through 5, $90,500 per year. A 6 percent discount rate is appropriate for this asset. and the company's tax rate is 40 percent. Use Exhibit A 8 and Exhiblt A.9. Required: a. Compute the present value of the tax shield resulting from depreciotion. b. Compute the present value of the tax shieid from depreciation assuming straight-line depreciation (\$120,500 per year) Complete this question by entering your answers in the tabs below. Compute the present value of the tax shield resulting from depreciation. (Round pV factor to 3 decimal places and other intermediate calculations to nearest whole number.) Required: a. Compute the present value of the tax shield resulting from depreciation. b. Compute the present value of thie tax shield from depreciation assuming straight-line depreciation (\$120,500 per year). Complete this question by entering your answers in the tabs below. Compute the present value of the tax shield from depreciation assuming straight-line depreciation (\$120,500 per year). (Round PV factor to 3 decimal places and other intermediate calculations to nearest whole number.)
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