Present value of tax savings from depreciation of robot in 10 years
Rate of return 12%
Income tax 30%
Cost of robot 40000
Disposal value of robot 1000
years 10
Straight line depreciation
How to do it on excel
I will give you the answer first, then the excel formula version
Year | Depreciation | Tax on Depreciation | PV Factor | Present Value |
1 | 3900 | 1170 | 0.892857143 | $ 1,044.64 |
2 | 3900 | 1170 | 0.797193878 | $ 932.72 |
3 | 3900 | 1170 | 0.711780248 | $ 832.78 |
4 | 3900 | 1170 | 0.635518078 | $ 743.56 |
5 | 3900 | 1170 | 0.567426856 | $ 663.89 |
6 | 3900 | 1170 | 0.506631121 | $ 592.76 |
7 | 3900 | 1170 | 0.452349215 | $ 529.25 |
8 | 3900 | 1170 | 0.403883228 | $ 472.54 |
9 | 3900 | 1170 | 0.360610025 | $ 421.91 |
10 | 3900 | 1170 | 0.321973237 | $ 376.71 |
$ 39,000.00 | $ 11,700.00 | $ 6,610.76 |
Year | Depreciation | Tax on Depreciation | PV Factor | Present Value |
1 | =(40000-1000)/10 | =D4*30% | =1/(1+12%)^C4 | =E4*F4 |
=C4+1 | =(40000-1000)/10 | =D5*30% | =1/(1+12%)^C5 | =E5*F5 |
=C5+1 | =(40000-1000)/10 | =D6*30% | =1/(1+12%)^C6 | =E6*F6 |
=C6+1 | =(40000-1000)/10 | =D7*30% | =1/(1+12%)^C7 | =E7*F7 |
=C7+1 | =(40000-1000)/10 | =D8*30% | =1/(1+12%)^C8 | =E8*F8 |
=C8+1 | =(40000-1000)/10 | =D9*30% | =1/(1+12%)^C9 | =E9*F9 |
=C9+1 | =(40000-1000)/10 | =D10*30% | =1/(1+12%)^C10 | =E10*F10 |
=C10+1 | =(40000-1000)/10 | =D11*30% | =1/(1+12%)^C11 | =E11*F11 |
=C11+1 | =(40000-1000)/10 | =D12*30% | =1/(1+12%)^C12 | =E12*F12 |
=C12+1 | =(40000-1000)/10 | =D13*30% | =1/(1+12%)^C13 | =E13*F13 |
=SUM(D4:D14) | =SUM(E4:E14) | =SUM(G4:G14) |
Present value of tax savings from depreciation of robot in 10 years Rate of return 12%...
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