Million worth of new equipment

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Your firm is considering a project that would require purchasing $7.5 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the? firm's tax rate is 40%?, the appropriate cost of capital is 8%?, and the equipment can be? depreciated:

a.? Straight-line over a? ten-year period, with the first deduction starting in one year.

b.? Straight-line over a? five-year period, with the first deduction starting in one year.

c. Using MACRS depreciation with a? five-year recovery period and starting immediately.

d. Fully as an immediate deduction.

a.? Straight-line over a? ten-year period, with the first deduction starting in one year. The present value of the depreciation tax shield associated with this equipment is ?$ nothing million. (Round the final answer to three decimal places.? Round all intermediate values to four decimal places as? needed.)

Reference no: EM132580024

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