What is the present value of this buildings tax shields

Assignment Help Financial Management
Reference no: EM13938523

A local engineering firm just bought a new office building (CCA=4%) for $500,000. Useful life of 30 years is expected with no salvage value. If tax rate is 40%, and required rate is 10%, then what is the present value of this building's tax shields?

Reference no: EM13938523

Questions Cloud

Degree of sensitivity of project to single variable rises : As the degree of sensitivity of a project to a single variable rises, the:
Variability of laboratory measured properties of category : Compare variability of laboratory measured properties of category 2 soil material for   a range of overburden pressure scenarios.
Critically analyse and reasearch a particular event : Could you refer to Order ID: MAH160814_16840_33120 for all the previous uploaded files? Thanks. Question: Develop a ‘whole-of-organisation' communication strategy for an international event to be conducted in City X involving multiple nationalitie..
Gregorian chant and plain chant : When you listen to Gregorian chant/plain chant such as"Ave, Rex noster, fili David" (link below), do you feel that It "stands alone," or do you feel that it could use harmony, more regular rhythm, or even musical instruments to be more effective? ..
What is the present value of this buildings tax shields : A local engineering firm just bought a new office building (CCA=4%) for $500,000. Useful life of 30 years is expected with no salvage value. If tax rate is 40%, and required rate is 10%, then what is the present value of this building's tax shields?
Describe the symptoms of that disease : Using Google (not Google Scholar), describe content from a source or sources claiming a treatment for which there exists little or no evidence or scientific plausibility for its efficacy. Describe what makes the treatment questionable.
Program to compute the weekly wages repeatedly : It contains the C++ wages program using a repeat loop in order to enable the user to compute several wages. The loop ends when the user enters -1 for either the hours_worked or the pay_rate. C++ uses the "do" keyword instead of "repeat".
Proceeds are used to repurchase outstanding stock : An unlevered firm with a market value of $1 million has $50,000 shares outstanding. The firm restructures itself by issuing 200 new bonds with an 8% coupon. Proceeds are used to repurchase outstanding stock. Ignoring taxes, what is the break even EBI..
What depreciation method does abercrombie and fitch use : What depreciation method does Abercrombie & Fitch use? What depreciation method does Aeropostale use? What are the typical useful lives of each company's operating assets?

Reviews

Write a Review

Financial Management Questions & Answers

  This debt must be repaid in two equal installments

ABC Corp has the opportunity to invest $1 million now (t=0) and expects after-tax returns of $600,000 in t=1 and $700,000 in t=2. The project will last for two years. The appropriate cost of capital is 12% with all-equity financing, the borrowing rat..

  About the reduce working capital

Your firm is contemplating the purchase of a new $605,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $65,000 at the end of that time. You will save $235,000 before..

  Whose stock trades in the tsx exchange

Burger King is owned by Restaurant Brands International Inc., a Canadian parent company, whose stock trades in the TSX exchange (Canada). Rather than using Burger King as a comparable company to McDonald's, I recommend you use The Wendy's Corporation..

  What is the equivalent annual cost of machine

Deniro's, Inc. is analyzing two machines to determine which one they should purchase. The company requires a 14 percent rate of return and uses straight-line depreciation to zero book value with no salvage value. What is the equivalent annual cost of..

  What is the current value of a share CCSI stock

CCS Inc. currently plays no dividends, but intends to pay a $12.00 per share dividend three years from today. However, CCSI expects earnings and dividends to decrease 5% annually thereafter. If the required rate of return for stocks with similar risk..

  Well-diversified portfolio that mirrors the performance

A fund manager has a well-diversified portfolio that mirrors the performance of the S&P 500 and is worth $510 million. The value of the S&P 500 is 1,700, and the portfolio manager would like to buy insurance against a reduction of more than 5% in the..

  New firm in rapidly growing industry

The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 17 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its..

  Describe how bach could use a straddle to hedge

Describe how Bach could use a straddle to hedge its possible positions in dirham. Consider three scenarios. In the first scenario, the dirham's spot rate at option expiration is equal to the exercise price of 0.98 euro.

  What is the annual ordering cost of the post card inventory

Cheeseburger and Taco Company purchases 10,075 boxes of cheese each year. It costs $25 to place and ship each order and $3.38 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders. What is t..

  Financing arrangement with slick willy cost

Your business does about $1.5 million in business, with sales equally spread throughout the year. Your average invoice size is about $26,000. You give all of your customers credit terms of Net 30 days, but most of your customers pay on 45 days. Assum..

  What is the net advantage to leasing

To finance some manufacturing tools it needs for the next 4 years, Waldrop Corporation is considering a leasing arrangement. Waldrop Corporation has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual ..

  What is the cost of gasoline

A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 3 mpg of gasoline. The extra cost of a CVT is $850 on the sticker price of a new car. For a particula..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd