Estimate present value of tax benefits from depreciation

Assignment Help Financial Management

Reference no: EM131891496

Your company is considering a new project that will require $978,000 million of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $148,000 using straight-line depreciation. The cost of capital is 13 percent, and the firm tax rate is 34 percent.

Estimate the present value of the tax benefits from depreciation.

Reference no: EM131891496

Questions Cloud

Find the marginal cost of preferred stock : ABC's common stock currently sells for $22 a share and next year will pay a quarterly dividend of $0.25 per share. Find the marginal cost of preferred stock.

Types of investments over the previous three decades : Suppose you gathered the following return data on these types of investments over the previous three decades:

Find the marginal cost of equity : ABC's tax rate is 35%. Find the marginal cost of equity.

Calculate weighted average cost of capital : ABC would like to expand and have a capital structure of. Calculate the weighted average cost of capital.

Estimate present value of tax benefits from depreciation : Estimate the present value of the tax benefits from depreciation.

Difference in percentage changes in prices of bond : If interest rates suddenly rise by 2 percentage points, what is the difference in percentage changes in prices of Bond A and Bond B?

Find the present value of the firm in dollars : Assuming a discount rate of 19%, find the present value (at Year 0) of the firm in dollars.

What was the total percentage return on shank stock : What was the total percentage return on Shank's stock during the third year?

What are the expected terminal cash flows at the end of year : What are the expected Terminal Cash Flows at the end of year 3, if we replace the old printing machine?

User Account

All Pages