Managerial Accounting: E9-11 Strauss Corporation is making a $60,000 investment
EXERCISE 9-11. Depreciation Tax Shield Strauss Corporation is making a $60,000 investment in equipment with a five-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.
Required What is the present value of the tax savings related to depreciation of the equipment?