Dave T.

asked • 12/13/20

What is the present worth of the depreciation tax held?

Company A purchases $200,000 of equipment in year zero. It decides to use straight-line

depreciation over the expected 20 years life of the equipment. The interest rate is 14%. If its

average tax rate is 40%, what is the present worth of the depreciation tax held?

A. $3,500.00

B. $26,500.00

C. $39,700.00

D. $4,000.00

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