2. You have acquired new equipment for a project costing $15 million. The equipment is expected to have a salvage value of $3 million and a depreciable life of 10 years. The cost of capital is 12%, and the firm faces a tax rate of 40%.. a. Estimate the present value and the nominal value of the tax benefits from depreciation, assuming that you use straight line depreciation. b. .Estimate the present value and the nominal value of the tax benefits from depreciation, assuming that you use double declining balance depreciation. c. .Why does double declining balance depreciation yield a higher present value?

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a Estimate the present value and nominal value of the tax benefits from depreciation assuming straightline depreciation 1 Calculate the depreciable am... View the full answer