1. Your company is considering a new project that will require 22,000 of new equipment at the start of the project. the equipment will have a depreciable life of 7 years and will be depreciated to a book value of 2,400 using straight line depreciation. The cost of capital is 10%, and the firm's tax rate is 40%. estimate the present value of the tax benefits from depreciation. a. 5453 b 1120 c 1680 d 200.
2. Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that maximum allowable payback and discounted payback statistic for the project are 2 and 3 years o,1,2,3,4, (-980,180,420,620,620,220,620) use the payback decision rule to evaluate this project should it be accepted or rejected a4.00 years reject b1.29 yrs, accept c 2.61 years, reject d 0 years, accept