Question
Your firm purchases a piece of equipment for $100,000 today. It will depreciate by $20,000 every year for the next five years starting this year.
Your firm purchases a piece of equipment for $100,000 today. It will depreciate by $20,000 every year for the next five years starting this year. Assuming a discount rate of 8% and a corporate tax rate of 20%, what is the present value of the depreciation tax shield?
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
5th edition
321280299, 321280296, 978-0321280299
