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A company replaced an old machine 4 years ago with a new one. They sold the new machine today for $330000. If the company had
A company replaced an old machine 4 years ago with a new one. They sold the new machine today for $330000. If the company had kept the old machine, it could have been sold for $100,000 today. The incremental undepreciated capital cost is $430000. The tax rate is 33%. The depreciation rate for the machines is 30%, and the company's cost of capital is 9%.
What is the present value of the incremental tax shields associated with selling the new machine?
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