Calculate net present worth of tax savings associated

Assignment Help Financial Management

Reference no: EM13873722

You work for a natural gas pipeline company; it has just spent $150,000,000 (fixed capital investment) building a new pipeline network that it plans to operate for 30 years. Assume that this entire expense is fully depreciable. Your company CEO wants to know whether it is worthwhile to use the MACRS depreciation schedule, or straight-line depreciation is better. Using the recovery periods listed below, calculate the net present worth of the tax savings associated with both schemes. Your CEO expects a 15% return on all investments.

Recovery period for MACRS = 15 yrs

Recovery period for straight-line = 22 years

Reference no: EM13873722

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