Your company is considering a new project that will require $790,000 of new equipment at the start of the project. The equipment will have adepreciable life of 5 years and will be depreciated to a book value of $255,000 using straight-line depreciation. The cost of capital is 12%, and the firm'stax rate is 21%. Estimate the present value of the tax benefits from depreciation.Multiple ChoiceO$84,530$22,470$107,000$80,999

Depreciation per year = ($790,000 - $255,000) / 5.= $107,000.

Answered: Your company is considering a new…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 18E

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