Respuesta :
Answer:
The multiple choices are:
A.$13,607.52
B.$14,841.29
C.$15,017.54
D.$16,997.13
The closest option is C,$15,017.54
Explanation:
The yearly depreciation charge on the new equipment is computed thus:
depreciation charge=cost -salvage value/useful life
cost is $100,000
salvage value is $25,000
useful life is 10 years
depreciation charge=$100,000-$25,000/10
=$75,000/10=$7,500
tax savings =depreciation charge*tax rate
tax rate is 34%
yearly tax savings =$7500*34%=$2550
present value of tax benefits=tax savings*annuity factor(11% for ten years)
annuity factor 11% for 10 years is 5.8892
present value of tax benefits=$2550*5.8892=$15,017.46
The Estimated present value of the tax benefits from depreciation is $15,017.54.
First step is to calculate the annual depreciation expense
Annual depreciation expense =($100,000 − $25,000]/10
Annual depreciation expense =$75,000/10
Annual depreciation expense =$7,500
Second step is to calculate the tax benefit
Tax benefit =$7,500(0.34)
Tax benefit=$2,550
Third step is to calculate the present value of the tax benefit using financial calculator
PV of tax benefits:
PMT = 2550
FV = 0
N = 10
I = 11%
Hence:
PV =$15,017.54
Inconclusion the Estimated present value of the tax benefits from depreciation is $15,017.54.
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