Project X requires an initial outlay of $21000 and will last for 7 years. The investment will be depreciated using straight‐line depreciation to a book value of 0 over the life of the project. The corporate tax rate is 25% and the required rate of return is 8%.

a) What is the annual depreciation amount for Project X? 

b) What is the annual depreciation tax shield for Project X? 

c) What is the total depreciation tax shield over the life of Project X? 

d) What is the present value of Project X's depreciation tax shields?

Answer rating: 100% (QA)

Depreciation and Tax Shield Calculations for Project X a Annual Depreciation Amount Since the project has a starting value of 21000 and needs to reach ... View the full answer