What is the depreciation tax shield

Reference no: EM13280415

Your firm needs a machine which costs $230,000, and requires $38,000 in maintenance for each year of its 5 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 5-year class life category. Assume a tax rate of 30% and a discount rate of 13%. What is the depreciation tax shield for this project in year 5?

Reference no: EM13280415

Questions Cloud

What would be the yield to maturity : Fitz's 25-year bond pays 11% interest annually on a $1,000 par value. If bonds sell at $845, what is the bond's yield to maturity? What would be the yield to maturity if the bond paid interest semiannually?

What will be the net cash flow for year one of this project : The firm has a tax rate of 30 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $57,000 at the beginning of the project. What will be the net cash flow for year one of this project?

Explain a compressed air car has several advantages : A compressed air car has several advantages over conventional vehicles - it has zero emissions, refueling can be done at home and there is no hazardous or rare battery chemical to deal with. The engine of such a car relies on the expansion of comp..

Find what is the shear rate of blood at the artery wall : The flow-rate of blood is assumed to be at high enough a rate that blood behaves as a Newtonian fluid. The fiber diameter is 600 microns and their length is 30 cm. You want a flow-rate of 12 ml/min for each fiber.

What is the depreciation tax shield : Assume a tax rate of 30% and a discount rate of 13%. What is the depreciation tax shield for this project in year 5?

Plot the voltage in the cap vc for all times : Let the current int he circuit be is(t) = u(t -1) and the initial voltage in the cap be Vc(0) = -1 volts. PLOT the voltage in the cap Vc(t) for all times. Suppose we double the current is(t) = 2u(t) - u(t -1) but keep same initial condition

What change in nwc occurs at the end of year 1 : The tax rate is 34 percent and the required return on the project is 11 percent. What change in NWC occurs at the end of year 1?

Explain nitrogen gas are mixed with excess hydrogen gas : For the following reaction, 5.02 grams of nitrogen gas are mixed with excess hydrogen gas. The reaction yields 4.74 grams of ammonia. nitrogen (g) + hydrogen (g) --> ammonia (g)

Define what will be the price of the bond : If they receive an A rating, the yield to maturity on similar A bonds is 10.5%. What will be the price of the bond if it receives and AA rating? An A rating? (Show would as well as answers)

User Account

All Pages