Alice Maid Company will purchase a van for $40,000. It will have a depreciable life of 5 years and no terminal salvage value. Assume a tax rate of 40% and a required after- tax rate of return of 12%. The present value of the after- tax saving from depreciation in year 2, if an accelerated method is used (of twice the straight- line rate), is:

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The Answer of Alice Maid Company will purchase a van for $40,000. It will have a depreciable life of 5 years and no terminal salvage value. Assume a tax rate of 40% and a required after- tax rate of return of 12%. The present value of the after- tax saving from depreciation in year 2, if an accelerated method is used (of twice the straight- line rate), is:

Alice Maid Company Will Purchase a Van for $40,000