Question
Your Company is considering a new project that will require $870,000 of new equipment at the start of the project. The equipment will have a
Your Company is considering a new project that will require $870,000 of new equipment at the start of the project. The equipment will have a depreciable life of 7 years and will be depreciated to a book value of $65,000 using straight-line depreciation. The cost of capital is 12%, and the firm's tax rate is 40%. Estimate the present value of the tax benefits from depreciation.
a). $46,000
b). $115,000
c). $209,933
d). $69,000
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
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