Question

Question 13 1 pts

Your company is considering purchasing a new system that costs $200,500. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the system is expected to be sold for $35,000 cash. The system will save the firm $110,400 per year in pretax operating costs. What is the after-tax cost saving per year associated with the new system? The tax rate is 21%.

$40,100

$87,216

$110,400

$23,184

Question 14 1 pts

Use the information from the previous question, what is the annual depreciation tax shield?

$8,421

$31,679

$40,100

$42,105

Question 15 1 pts

Use the information from the previous question, what is the net present value of this project if the discount rate is 12 percent?

$159,939

$164,110

$119,200

$144,249

Question 16 1 pts

Use the information from the previous question, what is the internal rate of return for this project?

38.26 percent

39.79 percent

40.18 percent

36.25 percent

Answer 1