Your company is considering a new project that will require $978.000 of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $148.000 using straight-line depreciation Neither bonus depreciation nor Section 179 expensing will be used The cost of capital is 13 percent, and the firm's tax rate is 21 percent Estimate the present value of the tax benefits from depreciation (Round your answer to 2 decimal places)

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.