Tax depreciation is straight-line over three years. Pre-tax salvage value is 25 in Year 3 and 50
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Tax depreciation is straight-line over three years. Pre-tax salvage value is 25 in Year 3 and 50 if the asset is scrapped in Year 2. Tax on salvage value is 40% of the difference between salvage value and book value of the investment. The cost of capital is 20%
Question
1) Suppose that the government now changes tax depreciation to allow a 100% write-off in Year 1 what would be NPV of project.
Related Book For
Financial Reporting Financial Statement Analysis and Valuation
ISBN: 978-0324302950
6th edition
Authors: Clyde P. Stickney
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