What is the present value of the depreciation tax shield

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Reference no: EM131445627

Now you have a firm, please answer two question below

1. What is the present value of the depreciation tax shield resulting from depreciating a $150,000 capital expenditure over three years if the tax rate is 15% and the opportunity cost of capital 10%?

2. You have just sold an asset for $500,000. Five years ago, you bought the asset for $600,000 and since have been depreciating the asset in a straight line over 20 years. What are the after-tax proceeds of the sale if your tax rate is 10%?

Reference no: EM131445627

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