The Metz Company plans to acquire an asset at a cost of $800,000 that will be depreciated
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The Metz Company plans to acquire an asset at a cost of $800,000 that will be depreciated for tax purposes as follows: Year 1, $230,000; Year 2, $300,000; and
$90,000 per year in each of Years 3.5. A 15 percent discount rate is appropriate for this asset, and the company's tax rate is 35 percent.
Compute the present value of the tax shield. Refer to Exhibit A for format.
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