The Brendan Excavation Company replaced an old machine 11 years ago with a new one. They sold the new machine today for $330000. If Brendan had kept the old machine, it could have been sold for $100,000 today. The incremental undepreciate capital cost is $430000. The tax rate is 32%. The depreciation rate for the machines is 30%, and Brendan's cost of capital is 10%. What is the present value of the incremental tax shields associated with selling the new machine? Make your answer accurate to pennies without the dollar sign. For example, if your answer is 12345.6789, enter 12345.68.

The Brendan Excavation Company replaced an old machine 11 years ago with a new one. They sold the new machine today for $330000. If Brendan had kept the old machine, it could have been sold for $100,000 today. The incremental undepreciate capital cost is $430000. The tax rate is 32%. The depreciation rate for the machines is 30%, and Brendan's cost of capital is 10%. What is the present value of the incremental tax shields associated with selling the new machine? Make your answer accurate to pennies without the dollar sign. For example, if your answer is 12345.6789, enter 12345.68.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

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