Your Company is considering a new project that will require $18,000 of new equipment at the start of the project. The equipment will have a depreciable life of 5 years and will be depreciated to a book value of $3,000 using straight-line depreciation. The cost of capital is 9%, and the firm's tax rate is 21%. Estimate the present value of the tax benefits from depreciation.
Multiple Choice
$3,000
$2,450
$2,370
$630
Your Company is considering a new project that will require $18,000 of new equipment at the...
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 percent, and the firm's tax rate is 34 percent. Estimate the present value of the tax benefits from depreciation.
Your Company is considering a new project that will require $1,040,000 of new equipment at the start of the project. The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $388,000 using straight-line depreciation. The cost of capital is 14%, and the firm's tax rate is 40%. Estimate the present value of the tax benefits from depreciation (closest to). $81,500 $48,900 $32,600 $151,227
Your company is considering a new project that will require $825,000 million of new equipment at the start of the project. The equipment will have a depreciable life of 9 years and will be depreciated to a book value of $141,000 using straight-line depreciation. Neither bonus depreciation nor Section 179 expensing will be used. The cost of capital is 12 percent, and the firm’s tax rate is 21 percent. Estimate the present value of the tax benefits from depreciation. Present...
Your company is considering a new project that will require $875,000 million of new equipment at the start of the project. The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $155,000 using straight-line depreciation. The cost of capital is 11 percent, and the firm’s tax rate is 30 percent. Estimate the present value of the tax benefits from depreciation
Your company is considering a new project that will require $1 million 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 $150,000 using straight-line depreciation. Neither bonus depreciation nor Section 179 expensing will be used. The cost of capital is 13 percent, and the firm’s tax rate is 21 percent. Estimate the present value of the tax benefits from depreciation. (Round...
I am unsure what the answer is for this question. Your Company is considering a new project that will require $540,000 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 $100,000 using straight-line depreciation. The cost of capital is 13%, and the firm's tax rate is 21%. Estimate the present value of the tax benefits from depreciation. Multiple Choice 0 $34,760...
Problem 12-2 PV of Depreciation Tax Benefits (LG12-4) Your company is considering a new project that will require $955,000 million of new equipment at the start of the project. The equipment will have a depreciable life of 9 years and will be depreciated to a book value of $154,000 using straight-line depreciation. Neither bonus depreciation nor Section 179 expensing will be used. The cost of capital is 12 percent, and the firm's tax rate is 21 percent. Estimate the present...
Problem 12-2 PV of Depreciation Tax Benefits (LG12-4) at the start of the Your company is considering a new project that will require $1,033,000 of new equipment 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 Estimate the present value of the tax benefits from depreciation. (Round your answer to...
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $697,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a market value of $192,000 at the end of the project. The project requires $62,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $187,600 a year. What is the net...
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $685,000 that would be depreciated on a straight-line basis to zero over the 4-year life of the project. The equipment will have a market value of $186,000 at the end of the project. The project requires $56,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $210,600 a year. What is the net...