What is the depreciation tax shield for this project

Assignment Help Financial Management

Reference no: EM13850053

Your firm needs a machine which costs $230,000, and requires $44,000 in maintenance for each year of its 10 year life. After 5 years, this machine will be replaced. The machine falls into the MACRS 10-year class life category. Assume a tax rate of 40% and a discount rate of 16%. What is the depreciation tax shield for this project in year 10?

Reference no: EM13850053

Questions Cloud

What will be the effect on cash flows of this sale : Suppose you sell a fixed asset for $91,000 when it's book value is $112,000. If your company's marginal tax rate is 35%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

Formulate the lp problem : A college department must plan the course offerings for the next semester. The education plan requires that at least 20 core courses and 20 electives be offered.Regardless of core or elective, a total of at least 60 courses must be offered. Each core..

What will the cash flows for this project be during year : You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $210,000. The truck falls into the MACRS 10-year class, and it will be sold after 10 years for $21,000. What will the cash fl..

Suppose the government were to change : Suppose the government were to change it's income assistance program from a welfare system with a basic benefit of B and a 100% clawback rate to a negative income tax program with the same basic benefit B and a 60% clawback rate.

What is the depreciation tax shield for this project : Your firm needs a machine which costs $230,000, and requires $44,000 in maintenance for each year of its 10 year life. After 5 years, this machine will be replaced. The machine falls into the MACRS 10-year class life category. Assume a tax rate of 40..

How much must an organization invest in a mutual fund : How much must an organization invest in a mutual fund today in order to sell its shares for $50,000 in three years, assuming the average annual market return will be 9%, compounded biweekly?. An organization plans to save $10,000 per month for a new ..

Received loan from local bank with nominal interest rate : Recently, Jamie and Jake each bought new cars. Both received a loan from a local bank with a nominal interest rate of 12% where payments are made at the end of each month, and they both pay the same monthly payment. Jamie's loan is for $15,000; howev..

Used to award scholarship : A fund of $5000 is used to award a scholarship of $500 at the end of each six months for as long as possible. If the effective interest rate per 6 months is 7%, find the number of scholarships which can be awarded, and the amount left in the fund six..

Why would the role of themarketing department : Why would the role of themarketing department in capital-intensive industries (e.g., aluminum) differ from that in labor-intensive industries (e.g., commercial airlines)?How does this relate to positioning?

User Account

All Pages