What is the present value of the tax benefits result

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Value of Accelerated Depreciation Freedom Corporation acquired a fixed asset for $100,000. Its estimated life at time of purchase was four years, with no estimated salvage value. Assume a discount rate of 8 percent and an income tax rate of 40 percent.

Required:

1. What is the present value of the tax benefits resulting from calculating depreciation using the sum-of- the-years'-digits method as opposed to the straight-line method on this asset?

2. What is the present value of the tax benefits resulting from calculating depreciation using the double- declining-balance method as opposed to straight-line method on this asset?

3. What is the present value of the tax benefits resulting from using MACRS as opposed to straight-line depreciation? The asset qualifies as a three-year asset. Use the half-year convention.

Reference no: EM13878246

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