Demonstrate that the fm of the depreciation deductions

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A company purchases an asset that costs $42,000. This asset quali?es as three-year property»I under MACRS. The company uses an after-ta): discount rate M1196 and faces a 4096 income tax rate.

Question 1. Demonstrate that the FM of the depreciation deductions. when the income tax rate is 40%, is $13,748.

Question 2. Given an after-tax discount rate of 11%. what tax rate would be needed in order for the PV of the depreciation deductions to equal $15,300?

Reference no: EM132694158

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