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Suppose you are going to purchase an investment that costs $35,000 with a life of 3 years. You anticipate that the marginal tax rate will be 25% over the next three years. The IRS will allow you to depreciate this investment over 7 years. You require at least a 15% pretax rate of return on capital. What is the present value of tax savings from depreciation?

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Financial Management, Finance

Category:- Financial Management
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