Joshua Company Will Purchase a Van for $40,000

question 110

Multiple Choice

Joshua Company will purchase a van for $40,000.It will have a depreciable life of 5 years and no terminal salvage value.Assume a tax rate of 20% and a required after-tax rate of return of 12%.The company uses straight-line depreciation for tax purposes.What is the present value of the after-tax savings from depreciation expense in year 1? (The present value of a single sum for one period at 12% is 0.8929.)

• A)$857.18
• B)$1,428.64
• C)$1,600.00
• D)$8,000.00

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Definitions:

Tender Of Payment

An offer to pay a debt or obligation in a legally recognized form.

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The normal and expected manner in which a business operates, including its regular transactions and practices.

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A legal action where a buyer rejects goods after initially accepting them, usually due to nonconformity with the contract.