1. What is the "Fischer equation" and what use would this equation have for capital budgeting?
2. Typically, annual depreciation allowances are not indexed to inflation. What is the impact of inflation on the tax savings from the annual depreciation allowance?
3. Considering the current state of our economy, inflation, and the new allowances for depreciation set forth in the Tax Cuts and Jobs Act of 2017. Does this change your answer to number 2? Why or why not. Explain in full.

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The Fischer equation is a macroeconomic equation that relates nominal interest rates real interest rates and expected inflation It is named after the economist Irving Fisher and is expressed as follow... View the full answer