Your company is considering a new project that will require $10,000 of new equipment at the start of the project. The equipment will have a depreciable life of five years and will be depreciated to a book value of $3,000 using straight-line depreciation. The cost of capital is 9 percent, and the firm's tax rate is 21 percent. Estimate the present value of the tax benefits from depreciation.

Q: Your Company is considering a new project that will require $530,000 of new equipment at the start…

A: Cost of project = $ 530,000 Closing book value = $ 229000 Life = 7 Years Annual depreciation =…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Equivalent annual savings is the cost of operating and maintaining an asset annually. It is also…

Q: Montcalm Company is evaluating the purchase of a new machine that costs $435,000, will have a CCA…

A: To calculate the tax shield, we need to first determine the tax depreciation allowance and the tax…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $24…

A: Given: Cost of equipment = $24 million Depreciated = 100% Tax rate = 30% Sale value = $7 million

Q: our company is considering a new project that will require $1 million of new equipment at the start…

A: Present value of the tax benefits from depreciation is that amount which is saved by the company due…

Q: Beta Inc. is implementing a cost-cutting proposal. The after-tax cost reduction is expected to equal…

A: NPV (Net Present Value) is a financial metric used to evaluate the profitability of an investment by…

Q: Estimate the present value of the tax benefits from depreciation. your answer to 2 decimal places.)

A: Depreciation is a deductible business expense.  Due to this taxable income of a company reduces by…

Q: Acefacto Inc., has asked for you to calculate the after-tax salvage value of an asset it plans on…

A: Data given: Sale price=$595,641 Book value after 10 years=$670,000 Tax rate=31%

Q: Your company is considering a new project that will require $100,000 of new equipment at the start…

A: Npv is a capital budegting techniques which help in decision Making on the basis of future cash…

Q: Your company is considering a new project that will require $2,000,000 of new equipment at the start…

A: To estimate the present value of the tax benefits from depreciation, calculate the annual tax shield…

Q: Your company is considering a new project that will require $1 million of new equipment at the…

A: Here, Cost of Equipment $ 1,000,000.00Book Value after 10 years $    150,000.00Life of Equipment in…

Q: Fool Proof Software is considering a new project whose data are shown below. The equipment that…

A: Year 1 cash flow is calculated as follows:- Sales revenue - operating costs -{ (sales revenue -…

Q: The XYZ Company is considering a new project that will have an annual depreciation expense of $3.7…

A: Approach to solving the question: Step 1: Figure out the cost of depreciation.First, figure out how…

Q: Daily Enterprises is purchasing a $10.4 million machine. It will cost $46,000 to transport and…

A: Step 1: The calculation of free cash flow for year 0 Given:Cost of machinery = $10,400,000Transport…

Q: Kelly, Inc. management is considering purchasing a new machine at a cost of $4,133,250.  They expect…

A: Net present value (NPV) is used to determine the present value of all future cash flows. Net present…

Q: Your company is considering a new project that will require $790,000 of new equipment at the start…

A: Depreciation per year = ($790,000 - $255,000) / 5.= $107,000.

Q: Your firm is considering investing in a new capital project that requires an initial investment of…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: what is the NPV of this project? ons and round your answer to 2 decin ons

A: The net present value involves taking the total expected return on an investment, deducting the…

Q: Longshore Drilling Company (LDC) is a contracting company that lays oil pipeline infrastructure. LDC…

A: Excess Present Value(PV) Index or Profitability Index shows proportion of PV of inflows in relation…

Q: Crane Company management is considering a project that will require an initial investment of $54,000…

A: Capital budgeting is the process where the feasibility of long-term asset purchase is assessed using…

Q: Elder, Inc. is considering the purchase of a new air-handling system that will have no effect on…

A: Savings means the amount which a firm earns by installing a new plant or project. The project which…

Q: You firm just bought a new machine. The machine cost $1,800,000. The machine will be operated for 4…

A: Capital Cost Allowance (CCA): It is an annual credit available under the income taxation system on…

Q: 23,300 in labour costs, and will be useful for 9 years. Suppose that for tax purposes, the lathe…

A: Net present value is the difference between present value of cash flow and initial investment.

Q: Your firm is considering a project that would require purchasing $7.5 million worth of new…

A: When there is reduction in income and because of that there is a decrease in taxable income and…

Q: Suppose that Sudbury Mechanical Drifters is proposing to invest $80 million in a new factory. It can…

A: Present Value of Depreciation Tax Shield = Annual Depreciation Tax shield * Present Value Annuity…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Equivalent Annual Savings is a financial concept employed in the evaluation of projects and…

Q: Dog Up! Franks is looking at a new sausage system with an installed cost of $715,000. The asset…

A: Therefore, Net present value = PV of cash inflow + PV of terminal cashflow - PV of cash outflow…

Q: You got asked to analyze a 5-year project for your firm. The project produces an annual revenue of…

A: Initial Investment  $  20,000.00 Annual revenue  $  28,500.00 Labor and materials cost  $…

Q: Your company is considering a new project that will require $825,000 of new equipment at the start…

A: Calculation of PV of Tax Benefits from Depreciation:The PV of tax benefits from depreciation is…

Q: A large profitable corporation is considering a capital investment of $50,000. The equipment has a…

A: Taxable income for the year 2 can be calculated by using this equation Taxable income for the year 2…

Q: The free cash flow for years 1-5 will be $ (Round to the nearest dollar.)

A: free cash flow for year 0 = Purchase price + Transport and Installation costs. free cash flow per…

Q: Proven Specialist will spend $850,000 on a piece of equipment that will manufacture fine wire for…

A: Net Investment Net Investment The net investment shows the amount of money that the company utilizes…

Q: your company is considering a new project that will require $10,000 of new equipment at the start of…

A: Annual depreciation =(Cost-Salvage value)/Useful Life =(10000-3000)/5 =$1400/year

Q: Gluon Incorporated is considering the purchase of a new high pressure glueball. It can purchase the…

A: Present value annuity factor is computed by following formula:-PVAF = wherePVAF = Present value…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.