Your company is considering a new project that will require $821,000 million of new equipment at the start of the project. The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $149,000 using straight-line depreciation. The cost of capital is 11 percent, and the firm’s tax rate is 30 percent. Estimate the present value of the tax benefits from depreciation.
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