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Your company is considering a new project that will require $978,000 million of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $148,000 using straight-line depreciation. The cost of capital is 13 percent, and the firm tax rate is 34 percent.

Estimate the present value of the tax benefits from depreciation.

Financial Management, Finance

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