Jane's Floor Care is contemplating the acquisition of some new equipment for
refinishing wood floors. The purchase price is $74,000. The firm uses MACRS
depreciation which allows for 33.33 percent, 44.44 percent, 14.82 percent, and 7.41
percent depreciation over years 1 to 4, respectively. The equipment can be leased for
$24,600 a year. The firm can borrow money at 9.5 percent and has a 34 percent tax rate.
What is the amount of the depreciation tax shield in year 4?
U.S. dollars deposited in a bank in Switzerland are called:
A. foreign depository receipts.
B. international exchange certificates.
Which one of the following best defines synergy given the following?
VA = Value of firm A
VB = Value of firm B
VAB = Value of merged firm AB
A. (VA + VB) - VAB
B. VAB - (VA + VB)
C. greater of 0 or (VA + VB) - VAB
D. greater of 0 or VAB - (VA + VB)
E. greater of 0 or VAB