# Your Company is considering a new project that will require \$10,000 of new equipment at the start of the project. The equipment will have a depreciable life of 5 years and will be depreciated to a book value of \$3,000 using straight-line depreciation. The cost of capital is 9%, and the firm's tax rate is 21%. Estimate the present value of the tax benefits from depreciation. Multiple ChoiceA. \$294B. \$1,106C. \$1,400D. \$1,144

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Your Company is considering a new project that will require \$10,000 of new equipment at the start of the project. The equipment will have a depreciable life of 5 years and will be depreciated to a book value of \$3,000 using straight-line depreciation. The cost of capital is 9%, and the firm's tax rate is 21%. Estimate the present value of the tax benefits from depreciation.

Multiple Choice

A. \$294
B. \$1,106
C. \$1,400
D. \$1,144
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Step 1

Given that:
Cost of new equipment is \$10,000
Salvage value \$3,000
Useful life (depreciable life) is 5 years
With the given information we need to determine presennt value of the tax benefits from depreciation

Step 2
Step 3

So, the annual tax savings on de...

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