Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3- year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent. Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.) Depreciation tax shield
Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3- year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent. Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.) Depreciation tax shield
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 4P
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![Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3-
year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither
bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent.
Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.)
Depreciation tax shield](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F49c054c7-a103-486f-a3ab-4236b292e769%2Fa1d6f947-7c3f-4196-8baa-58f724e63b6c%2Fnbv9jei_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3-
year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither
bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent.
Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.)
Depreciation tax shield
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