In a Net Present Value Analysis of an Equipment Upgrade

question 16

Multiple Choice

In a net present value analysis of an equipment upgrade using a 30% tax rate, what amount of cash savings would have the same present value as a $168,000 depreciation deduction?

• A) $35,280
• B) $50,400
• C) $72,000
• D) $117,600

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Definitions:

Percentage Of Ownership

Refers to the fraction of a company's shares that an individual or entity owns, typically expressed as a percentage of the total shares.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period.

Investor

An individual or entity that allocates capital with the expectation of receiving financial returns.

Investee

denotes an entity in which another entity holds an interest, typically through investment.