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What is the present value of the tax savings

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Reference no: EM132990353

Question - Kennel Corporation is making a $78,900 investment in equipment with a 5-year life. The company uses the straight-line method of depreciation and has a tax rate of 20 percent. The company's required rate of return is 14 percent.

Present value of $1 due in n periods 5-year life at 20% = 0.4019

Present value of an annuity of $1 per period 5-year life at 20% = 2.9906

What is the present value of the tax savings related to depreciation of the equipment?

Reference no: EM132990353

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