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37) Managerial Financial Accounting Assignments AE9-11 Solution

# 37) Managerial Financial Accounting Assignments AE9-11 Solution

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AE9-11

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Incorrect. Depreciation Tax Shield [LO 4] Strauss Corporation is making a \$62,500 investment in equipment with a 5-year life. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The company’s required rate of return is 12 percent. What is the present value of the tax savings related to depreciation of the equipment? (Round the present value factor calculations to 4 decimal places, e.g. 0.2525. Round all other
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Unformatted text preview: calculations and the final answer to 2 decimal places, e.g. 25.21.) Present Value \$[no answer] Click here if you would like to Show Work for this question AE9-11 Annual depreciation \$62,500 ÷ 5 years \$12,500.00 Annual tax savings \$12,500.00 × 0.40 \$5,000.00 Present value of \$5,000.00 per year for 5 years at 12% \$5,000.00 × 3.6048 \$ 18,024.00...
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37) Managerial Financial Accounting Assignments AE9-11 Solution

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