Question: Your company is considering a new project that will require $10,000 of new equipment at the start of the project. The equipment will have

Your company is considering a new project that will require $10,000 of

Your company is considering a new project that will require $10,000 of new equipment at the start of the project. The equipment will have a depreciable life of five years and will be depreciated to a book value of zero using straight-line depreciation. The cost of capital (discount rate) is 20 percent, and the firm's tax rate is 10 percent. Estimate the present value of the tax benefits from depreciation.

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