Your Company Is Considering a New Project That Will Require

question 37

Multiple Choice

Your company is considering a new project that will require $250,000 of new equipment at the start of the project. The equipment will have a depreciable life of eight years and will be depreciated to a book value of $10,000 using straight-line depreciation. The cost of capital is 12 percent, and the firm's tax rate is 34 percent. Estimate the present value of the tax benefits from depreciation.

• A)$63,617.52
• B)$50,669.93
• C)$75,017.54
• D)$86,997.13