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Depreciation Tax Shield [LO 4]

Strauss Corporation is making a $71,900 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 calculations and the final answer to 2 decimal places, e.g. 25.21.)

Present Value $

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M9435180

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