True regarding cost-cutting proposals

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Reference no: EM132014978

1. Your company is considering a new project that will require $10,000 of new equipment at the start of the project. The equipment will have a depreciable life of five years and will be depreciated to a book value of $3,000 using straight-line depreciation. The cost of capital is 9 percent, and the firm's tax rate is 34 percent. Estimate the present value of the tax benefits from depreciation.

A. $476

B. $924

C. $1,400

D. $1,851

2. Which statement is true regarding cost-cutting proposals?

A. Cost-cutting proposals main benefits are from changes in sales and changes in costs.

B. Cost-cutting proposals main benefits come only from changes in sales.

C. Cost-cutting proposals main benefits come only from changes in costs.

D. Cost-cutting proposals main benefits come from the change in sales due to the response from the cost-cutting proposal.

Reference no: EM132014978

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