Celebration Cruises wants to acquire a new tender at a cost $425,000. The tender will have an estimated salvage value at the end of its 8-year life of $50,000. It is expected that annual incremental income before taxes will be $36,000. Celebration Cruises plans to make the purchase on January 1, 2014. The company's cost of capital is 9% and the required rate of return is 10%. The income tax rate is 32%. How much is the depreciation tax shield for 2014?

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The Answer of Celebration Cruises wants to acquire a new tender at a cost $425,000. The tender will have an estimated salvage value at the end of its 8-year life of $50,000. It is expected that annual incremental income before taxes will be $36,000. Celebration Cruises plans to make the purchase on January 1, 2014. The company's cost of capital is 9% and the required rate of return is 10%. The income tax rate is 32%. How much is the depreciation tax shield for 2014?

Celebration Cruises Wants to Acquire a New Tender at a Cost