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ABC Ltd is considering investing $2.5 million in a precision excavating machine which is expected to have a zero salvage value at the end of

ABC Ltd is considering investing $2.5 million in a precision excavating machine which is expected to have a zero salvage value at the end of its six-year life. The company uses a discount rate of 10% to value all its investments and its corporate tax rate is 30%. If the machine is depreciated on a straight-line basis over its economic life, calculate the present value of the depreciation tax shield. Show all calculations.

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