If the depreciation rates are 12% in Year 1 and 18% in Year 2, what is the depreciation tax shield for Year 1 of the project?
If the depreciation rates are 12% in Year 1 and 18% in Year 2, what is the depreciation tax shield for Year 1 of the project?
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 5PROB
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You are expanding your operations and buying a new machine. The new machine will cost $440,000 and will cost $22,000 to ship and install. The new machine will make more products so you will need to purchase $40,000 of inventory to meet the demand. You plan to operate the machine for two years and then sell the machine for $200,000. The corporate tax rate is 35%.
If the
Group of answer choices
A. $21,696.00
B. $17,680.00
C. $18,984.00
D. $19,404
E. $18,080.00
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