The first deduction starting in one year

Assignment Help Financial Management
Reference no: EM132028799

Your firm is considering a project that would require purchasing $7.9 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the? firm's tax rate is 33%?, the appropriate cost of capital is 8 %?, and the equipment can be? depreciated:

Please round all answers to 4 decimals.

a. Straight-line over a ten-year period, with the first deduction starting in one year.

b. Straight-line over a five-year period, with the first deduction starting in one year.

c. Using MACRS depreciation with a five-year recovery period and starting immediately.

d. Fully as an immediate deduction.

Reference no: EM132028799

Questions Cloud

Calculate his monthly repayments : The bank offers him a 25-year mortgage at 2% interest. Calculate his monthly repayments.
Different securities risks and securities liquidity : Discuss how market interest rates are affected by borrowers’ need for capital, expected inflation, different securities’ risks, and securities’ liquidity
What is the balance of the treasury stock account : What is the balance of the Treasury Stock account after these transactions are recognized?
Create new budgeted income : Create a new budgeted income for 20XZ assuming that the production and sales is double the level of 20XY.
The first deduction starting in one year : Straight-line over a ten-year period, with the first deduction starting in one year.
Assuming projected inflows and outflows are accurate : Assuming projected inflows and outflows are accurate, under what conditions can Jones expect to see a return equal to IRR? Is this realistic?
What is the total depreciation expense : What is the total depreciation expense (to the nearest dollar) at the end of year 4?
Futures might be an effective hedge for jet fuel : What statistic would you examine to determine whether oil futures might be an effective hedge for jet fuel?
Index futures is necessary to increase portfolio beta : What position in index futures is necessary to increase the portfolio beta to 1.5?

Reviews

Write a Review

Financial Management Questions & Answers

  Method for increasing your company short-term cash position

Which of the following is an internal method for increasing your company's short-term cash position?

  What is the post-money valuation

A potential investor is seeking to invest $750,000 in our venture at an expected 40% rate of return. What is the pre-money valuation and post-money valuation?

  Hedge the trader’s position at the time of the trade

What position in the stock is necessary to hedge the trader’s position at the time of the trade?

  Annual dividend-what is the value of the stock

Trust Bankers just paid an annual dividend of $1.5 per share. The expected dividend growth rate is 6.7 percent, the discount rate is 11 percent, and the dividends will last for 19 more years. What is the value of the stock?

  What is the value of the quick ratio

Jessica's boutique has cash of $50, accounts receivable of $60, accounts payable of $400, and inventory of $100. What is the value of the quick ratio?

  What is the length of the cash cycle

What is the length of the cash cycle?

  What is the appropriate long-run market risk premium

You have just computed the Beta of a stock to be 2.5 and the estimate of the relevant risk-free rate is 5%. The expected market return next period is 12% and your estimate of Ke is 23%. What is the appropriate long-run market risk premium? a. 7.0% b...

  Applies to individual taxpayers are correct

All of the following statements concerning the AMT as it applies to individual taxpayers are correct, EXCEPT:

  Estimated quarterly sales for the next year

The Grain and Feed Store purchases are equal to 68 percent of the following quarter's sales. The accounts receivable period is 15 days and the accounts payable period is 30 days. Assume there are 30 days in each month. The store has estimated quarter..

  Compute the required estimated tax payments

compute the required estimated tax payments for 2016 tax in each of the following circumstances.

  Total real return on the investment

You bought one of Bergen Manufacturing Co.’s 7.8 percent coupon bonds one year ago for $1,061. These bonds make annual payments and mature twelve years from now. Suppose you decide to sell your bonds today when the required return on the bonds is 4.5..

  Calculate mirr of the project using discounting approach

RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 28,700 1 10,900 2 13,600 3 15,500 4 12,600 5 – 9,100 The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project using t..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd