What is the present value of tax savings from depreciation

Assignment Help Financial Management

Reference no: EM131872197

Suppose you are going to purchase an investment that costs $35,000 with a life of 3 years. You anticipate that the marginal tax rate will be 25% over the next three years. The IRS will allow you to depreciate this investment over 7 years. You require at least a 15% pretax rate of return on capital. What is the present value of tax savings from depreciation?

Reference no: EM131872197

Questions Cloud

Summarize briefly how you prepared for your first two exams : Using at least 3 concepts covered today, describe how you can change your study habits to improve your memory and study skills for your next exam.

Highest potential loss from this position : The call premium is $5.10 per share and the put premium is $8.65 per share. Your highest potential loss from this position is _____.

Summarize customer empathy map : Using the design and prompts on page 131 of the textbook, create a customer empathy map, and summarize it using the appropriate categories

Calculate portfolio new beta : Calculate your portfolio's new beta.

What is the present value of tax savings from depreciation : Suppose you are going to purchase an investment that costs $35,000 with a life of 3 years. What is the present value of tax savings from depreciation?

Analyze the overall role of women in the islamic religion : Describe the main similarities and differences between at least two sects of the Islamic religion. Analyze the overall role of women in the Islamic religion.

What is the npv of project : Given the following information and assuming straight-line depreciation to zero, what is the NPV of this project?

Straight-line method versus an accelerated method : Explain the impact of calculating depreciation using the straight-line method versus an accelerated method

What is the monthly payment on the loan : The mortgage has a term of 30 years. What is the monthly payment on the loan?

User Account

All Pages