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Rush Corporation plans to acquire production equipment for $625,000 that will be depreciated for tax purposes as follows: yea $125,000; year 2. $215,000; and in
Rush Corporation plans to acquire production equipment for $625,000 that will be depreciated for tax purposes as follows: yea $125,000; year 2. $215,000; and in each of years 3 through 5, $95,000 per year. A 14 percent discount rate is appropriate for th asset, and the company's tax rate is 40 percent. Use Exhibit A8 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 ($125,000 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 SHA Required B Rush Corporation plans to acquire production equipment for $625,000 that will be depreciated for tax purposes as follows year 1. $125,000; year 2, $215,000; and in each of years 3 through 5, 595,000 per year. A 14 percent discount rate is appropriate for this asset, and the company's tax rate is 40 percent. Use Exhibit A8 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 ($125,000 per year). Complete this question by entering your answers in the tabs below. Required A Reqdired B Compute the present volue of the tax shield from depreciation assuming straight-line depreciation ($125,000 per year) (Round PV factor to 3 decimal places and other intermediate calculations to nearest whole number.) Present value of the tax shield
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