
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Problem 12-7 Spreadsheet Problem: Depreciation Tax Shield (LG12-4)
Your firm needs a computerized machine tool lathe which costs $50,000 and requires $12,000 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 12 percent.
Calculate the depreciation tax shield for this project in year 3.
Note: Round your answer to 2 decimal places.
Depreciation tax shield
$
0.00
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