Your company is considering a new project that will require $1 million of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $150,000 using straight-line depreciation. The cost of capital is 13 percent, and the firm’s tax rate is 34 percent. Estimate the present value of the tax benefits from depreciation.
Answer to relevant QuestionsYou are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $14,000 to purchase and which will have OCF of -$1,200 annually throughout the vehicle’s ...If the lathe in the previous problem can be sold for $5,000 at the end of year 3, what is the after-tax salvage value?Derive an accept/reject rule for IRR similar to equation 13-8 that would make the correct decision on cash flows that are non-normal, but that always have one large positive cash flow at time zero followed by a series of ...Compute the IRR statistic for Project E and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 8percent.Use the discounted payback decision rule to evaluate this project; should it be accepted orrejected?
Post your question