Problem:
Your company is considering a new project that will require $1,033,000 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 $153,000 using straight-line depreciation. The cost of capital is 13 percent, and the firm's tax rate is 34 percent.
Required:
Question: Estimate the present value of the tax benefits from depreciation.
Note: Explain all steps comprehensively.