Answer the blank.

Ms T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $570,000 of this sum. $67.000 is described by the supplier as an installation cost. Ms. Potts does not know whether the company will need to treat this cost as a tax- deductible current expense or as a capital investment. In the latter case, the company could depreciate the $67,000 straight-line over five years How will the tax authority's decision affect the after-tax cost of the kin? The tax rate is 25%, and the opportunity cost of capital is 7% (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Installation cost is expensed at the end of your 1 installation cost is capitalized and depreciated over 5 years PV Tax shield $ 15,654 After tax cost is smaller Afer tax cost is larger