Ask Experts Questions for FREE Help !
Ask
    mastermel1's Avatar
    mastermel1 Posts: 1, Reputation: 1
    New Member
     
    #1

    Jul 25, 2010, 03:15 PM
    Estimating cash flows on capial budgeting projects
    Your company is considering a new project that will require $1,000,000 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 $150,000 using straight-line depreciation. The cost of capital is 13 percent, and the firm's tax rate is 34 percent. Estimate the present value of the tax benefits from depreciation.
    I am required to do this problem in Excel, and I have no idea where to start. Please help!
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
     
    #2

    Jul 26, 2010, 06:38 AM
    To give a better idea of where you might be stuck, post back in with your thoughts on these...


    • How much total depreciation will the company take on this asset?
    • Using the straight-line method, how much depreciation will the company take each year over the asset's life?
    • At the given tax rate, what will be the annual tax benefit of the annual depreciation expense?

    That'll kick things off.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Estimating Cash disbursements [ 3 Answers ]

What is the process behind estimating cash disbursements?

Cash Budgeting [ 2 Answers ]

The management of West Valley Memorial Hospital needs to prepare a cash budget for July 2006. The following information is available: a. The cash balance on July 1, 2006, is $236,000. \ b. Actual services performed during May and June and projected services for July are: ...

Cash Budgeting [ 1 Answers ]

Explain how a fixed cash budget differs from a variable or flexible cash budget What two basic needs does a flexible (variable) cash budget serve What world be the probable effect on a firm's cash position of the following events a) Rapidly rising sales b) A delay in the payment of...


View more questions Search