What is annual depreciation expense for tax purposes

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1. A rancher is planning on purchasing additional raw land. Assume that the marginal tax rate is 15%. Assume further that IRS will allow the investor to depreciate machinery investments using straight-line over 10 years. If the initial cost of an investment is $42,000. What is the annual depreciation expense for tax purposes?

$3,333.33

$4,200

$6,300

$6,666.67

None of the answers are correct

2. A farmer is considering the purchase of additional land to expand operations. The marginal tax rate is 20% and He requires at least a 13% pre-tax, risk free return on capital and a 3% risk premium on projects on comparable risk. What is the after-tax, risk adjusted discount rate? r=[rbt +PREM](1-m)

12.8%

19.2%

8%

12%

None of the answers are correct

Reference no: EM131915812

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