Your Company is considering a new project that will require $870,000 of new equipment at the start of the project. The equipment will have a depreciable life of 7 years and will be depreciated to a book value of $65,000 using straight-line depreciation. The cost of capital is 12%, and the firm's tax rate is 40%. Estimate the present value of the tax benefits from depreciation.

a). $46,000

b). $115,000

c). $209,933

d). $69,000

Answer rating: 100% (QA)

Answer Depreciation per year 870000 65000 7 115000 Ta... View the full answer