Estimate the present value of tax benefits from depreciation

Assignment Help Finance Basics
Reference no: EM13263361

Your company is considering a new project that will require $875,000 of new equipment on the start of a project. The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $155,000 using a straight line depreciation. The cost of capital is 11% and the firm's tax rate is 30%. Estimate the present value of the tax benefits from depreciation?

Reference no: EM13263361

Questions Cloud

Determine the attenuation of the signal at frequency : A 6th order Chebyshev low pass filter has a 0.5dB ripple in the pass-band and has a cutoff frequency of 5Khz, determine the attenuation (dB) of the signal at: 1. 4Khz 2. 40Khz 3. 40Mhz
What is the weighted average cost of capital at the optimal : what is the firm's optimal capital structure, and what is the weighted average cost of capital at the optimal structure?
What would appropriate tax rate be for use in calculation : What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC?
What is the cross-rate in terms of yen per pound : Suppose the Japanese Yen exchange rate is 106 yen/dollar, and the British pound exchange rate is $1.51 dollars/pound. What is the cross-rate in terms of yen per pound?
Estimate the present value of tax benefits from depreciation : The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $155,000 using a straight line depreciation. The cost of capital is 11% and the firm's tax rate is 30%. Estimate the present value of the tax benefits..
Which one of the following occurred over the last year : Suppose you could buy 1,320 South Korean won or 78 Pakistani rupees last yer for $1. Today, $1 will buy you 1,318 won or 80 rupees. Which one of the following occurred over the last year?
Is the australian dollar expected to get stronger or weaker : The exchange rate for the Australian dolllar is currently 1.40 Australian dollars/US$. This exchange rate is expected to rise by 10% over the next yerar. Is the Australian dollar expected to get stronger or weaker, nd why?
What is the force on the window : A window in a house is rectangular, with height 49 cm and width 29 cm. What is the force on the window
What additional costs will be charged to this customer : The firm had two consultations with this client and required 130 administrative labor hours. What additional costs will be charged to this customer?

Reviews

Write a Review

Finance Basics Questions & Answers

  Find difference in the effective annual rates

Gomez Electrics requires arranging financing for its expansion program. Bank A offers to lend Gomez the required funds on a loan in which interest must be paid monthly, and the quoted rate is 8 percent

  Find degree of operating leverage before and after expansion

Highland Cable Corporation is planning an expansion of its facilities. Its current income statement is as follows, Highland Cable Corporation is currently financed with 50% debt and 50% equity

  Profit sharing plan for employees

All profit-sharing plans must have a formula under which contributions are allocated to participants' accounts.

  Find higher operating leverage

In its 2006 yearly report, the coca-cola company reported sales of $24.09 billion for fiscal year 2006 and 23.10 billion for fiscal year 2005. The firm also reported operating income of 6.31 billion

  Differential incidence of substituting payroll tax

What would be the impact on labor and capital markets of such a shift in tax policy? What is the likely differential incidence of substituting a payroll tax for an equal-yield corporate income tax?

  Objective type questions on portfolio management

Objective type questions on portfolio Management and What is the best estimate of the current stock

  Fasb fair value-time value of money tools

Explain the concepts of present value and discuss your interpretation of their value as assessment tools for accountant or operator (include an example).

  Explain what action should the company president take

Explain What action should the company president take and should the order be accepted if the Executive Division plans on selling the desks in the outside market for $420

  Computing portfolio expected return and standard deviation

An investor has a $10,000 portfolio that allocated as given: short 100 shares of stock A, purchase 250 shares of B and 200 shares of 3. Any additional funds are lent at risk free rate of 0.04.

  Determine correct statement

Today, you can get either 121 Canadian dollars or 1,288 Mexican pesos for 100 United State dollars. Last year, 100 United State dollars was worth 115 Canadian dollars or 1,291 Mexican pesos.

  Value of investment when interest is compounded

If a nurse deposits $1,000 today in the bank account and the interest is compounded annually at 12%, what will be the value of this investment:

  Time value of money solution

How much more must Keith save each year (suppose end of the year payments) for each of next eight years to have enough savings to pay for his daughter? Assume Keith can earn 9% on his savings.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd