How much has the dollar tax shield changed

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Reference no: EM132046747

1. A six-year annuity of $10000 quarterly payments will begin 8 years from now. The discount rate is 9%, compounded quarterly.

a) How much is this annuity worth 5 years from now?

b) How much is this annuity worth today?

2. A UK’s Firm has £750,000 of depreciation expense on its subsidiary’s books. The US income tax rate is 35% and the spot exchange rate is £.75/$ if the dollar appreciates to £.85/$ how much has the dollar tax shield changed?

A. The tax shield decline $76,471

B. The tax shield Increased $76,471

C. The tax shield decline $117,647

D. The tax shield Increased $41,176

E. The tax shield decline $41,176

Reference no: EM132046747

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