Cost of asset = $149,000
Useful life = 8 years
Annual depreciation = Cost of asset/Useful life
= 149,000/8
= $18,625
Marginal tax rate = 40%
Depreciation tax shield = Annual depreciation x Tax rate
= 18,625 x 0.4
= $7,450
Third option is the correct option.
PE = 15.1 times
Net earnings = Addition to retained earnings + Dividend paid
= 1,575,000 + 525,000
= $2,100,000
Earning per share = Net income/Number of shares outstanding
= 2,100,000/495,000
= $4.24
Stock price = PE x Earning per share
= 15.1 x 4.24
= $64.06
Fifth option is the correct option
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