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Your Company is considering a new project that will require $22,000 of new equipment at the start of the project. The equipment will have a

Your Company is considering a new project that will require $22,000 of new equipment at the start of the project. The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $2,000 using straight-line depreciation. The cost of capital is 11%, and the firm's tax rate is 40%. Estimate the present value of the tax benefits from depreciation.

$1,500

$1,000

$2,500

$5,146

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