Macaron Corporation is making a $96,400 investment in equipment with a 5-year life. The company uses the straight-line method of depreciation and has a tax rate of 20 percent. The company’s required rate of return is 10 percent. What is the present value of the tax savings related to depreciation of the equipment? (Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answer to 0 decimal place, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) The present value $enter present value in dollars rounded to 0 decimal place
Macaron Corporation is making a $96,400 investment in equipment with a 5-year life. The company uses the straight-line method of depreciation and has a tax rate of 20 percent. The company’s required rate of return is 10 percent. What is the present value of the tax savings related to depreciation of the equipment? (Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answer to 0 decimal place, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) The present value $enter present value in dollars rounded to 0 decimal place
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 1P
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Macaron Corporation is making a $96,400 investment in equipment with a 5-year life. The company uses the straight-line method of depreciation and has a tax rate of 20 percent. The company’s required rate of return is 10 percent.
What is the present value of the tax savings related to depreciation of the equipment? (Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answer to 0 decimal place, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
What is the present value of the tax savings related to depreciation of the equipment? (Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answer to 0 decimal place, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
| The present value | $enter present value in dollars rounded to 0 decimal place |
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