You just bought an asset with a straight line depreciation of $6200 per year for the next 8 years. Assuming a corporate tax rate of 21%, what is the NPV of the actual cash savings associated with this cashflow? Use a discount rate of 6%.

You just bought an asset with a straight line depreciation of $6200 per year for the next 8 years. Assuming a corporate tax rate of 21%, what is the NPV of the actual cash savings associated with this cashflow? Use a discount rate of 6%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

You just bought an asset with a straight line
depreciation of $6200 per year for the next
8 years. Assuming a corporate tax rate of
21%, what is the NPV of the actual cash
savings associated with this cashflow? Use
a discount rate of 6%.

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