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- 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?
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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! |
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That'll kick things off. |
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