What tax rate would needed in order for pv of depreciation

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Reference no: EM132691908

A company purchases an asset that costs $42,000. This asset quali?es as three-year property under MACRS. The company uses an after-tax discount rate M1196 and faces a 4096 income tax rate.

Question 1: Demonstrate that the FM of the depreciation deductions. when the income tax rate is 40%, is $13,748.

Question 2: Given an after-tax discount rate of 11%. what tax rate would be needed in order for the PV of the depreciation deductions to equal $15,300?

Reference no: EM132691908

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