Question: Your company is considering a new project that will require $855,000 of new equipment at the start of the project. The equipment will have a

Your company is considering a new project that will require $855,000 of new equipment at the start of the project. The equipment will have a depreciable life of 9 years and will be depreciated to a book value of $144,000 using straight-line depreciation. The cost of capital is 12 percent, and the firms tax rate is 35 percent.

Estimate the present value of the tax benefits from depreciation.

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