According to the Modified Accelerated Cost Recovery System (MACRS) of depreciation imposed by U.S. tax law, autos

Question:

According to the Modified Accelerated Cost Recovery System (MACRS) of depreciation imposed by U.S. tax law, autos and computers must be depreciated the following way for tax purposes:

What is the present value of the interest tax shield from the purchase of an automobile for $50,000, with a cost of capital of 10 percent and a tax rate of 34 percent?
What would be the effect of a change in the tax law from MACRS to straight line depreciation?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...