Exercise A-13 (Algo) Present Value of Cash Flows Rush Corporation plans to acquire production equipment for $647,500 that will be depreciated for tax purposes as follows: year 1, $129,500; year 2, $219,500; and in each of years 3 through 5, $99,500 per year. A 12 percent discount rate is appropriate for this asset, and the company's tax rate is 40 percent. Use Exhibit A.8 and Exhibit A.9 Required: a. Compute the present value of the tax shield resulting from depreciation. b. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($129,500 per year) Complete this question by entering your answers in the tabs below. Required A Required B 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.) Present value of the tax shield FE Required A Required B Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($129,500 per year). (Round PV factor to 3 decimal places and other intermediate calculations to nearest whole number.) Present value of the tax shield Star City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.8. Year 1 2 3 4 5 Net Cash Flow $ 31,080 61,000 91,000 91,800 111,000 This schedule includes all cash inflows from the project, which will also require an immediate $ 211,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 26 percent? b. What is the net present value of the project if the appropriate discount rate is 15 percent? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of the project if the appropriate discount rate is 26 percent? (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.) Net present value Required: a. What is the net present value of the project if the appropriate discount rate is 26 percent? b. What is the net present value of the project if the appropriate discount rate is 15 percent? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of the project if the appropriate discount rate is 15 percent? (Round PV factor to places.) Net present value