Problem:
Your Company is considering a new project that will require $100,000 of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $25,000 using straight-line depreciation. The cost of capital is 11%, and the firm's tax rate is 34%.
Required:
Question: Estimate the present value of the tax benefits from depreciation.
- $13,607.52
- $14,841.29
- $15,017.54
- $16,997.13
Note: Show supporting computations in good form.