b. Suppose that the government allows companies to use double-declining balance depreciation with the option to switch at any point to straight-line. Now what is the present value of the depreciation tax shields? (Enter your answers in millions rounded to 1 decimal place.) Total Double decline Schedule Start of Year Book Value Depreciation Tax Shields at 40% Tc PV (Tax Shields) at 12% Answer is not complete. Year Year Year Year Year Year Year Year Year Year 1 2 3 4 5 6 7 8 9 10 $ 11.2$ 9.0 $ 72$ 5.7$ 4.6$ 3.7$ 2.9 $ 2.3 $ 1.9 X $ 1.5 % $ 2.2$ 1.8 $ 1.4$ 1.1 0.9 0.7$ 0.6 $ 0.5 * $ 0.4 $ 0.3 $ 0.9$ 0.7 $ 0.6 S 0.5$ 0.4$ 0.3 $ 0.2 $ 0.2 $ 0.2% $ 0.1% $ 0.8$ 0.6 $ 0.4$ 0.3$ 02$ 0.1$ 0.1$ 0.1$ 0.1$ 0.0 % c. What would be the present value of the tax shield if the government allowed Sudbury to write-off the factory immediately? (Enter your answer in millions rounded to 1 decimal place.) Percent value of depreciation tax shields Suppose that Sudbury Mechanical Drifters is proposing to invest $11.2 million in a new factory. It can depreciate this investment straight-line over 10 years. The tax rate is 40%, and the discount rate is 12%. a. What is the present value of Sudbury's depreciation tax shields? (Enter your answers in millions rounded to 1 decimal place.) Straight-line Schedule 1 3 4 8 9 Straight-line, 10-year Tax Shields at 40% To PV (Tax Shields) at 12% Answer is complete and correct. Year Year Year Year Year Year Year Year Year Year 2 5 Total 6 7 10 $ 1.15 1.10 $ 1.1 S 11 S 11 S 110 $ 1.10 $ 1.13 1.15 1.1$ 1120 $ 0.40 $ 04 S 043 04 $ 0.40 $ 04 $ 043 04 03 04 04 $ 4.50 $ 0.4 0.4 03$ 03$ 03$ 02$ 0.23 0.23 0.23 0.125 b. Suppose that the government allows companies to use double-declining balance depreciation with the option to switch at any point to straight-line. Now what is the present value of the depreciation tax shields? (Enter your answers in millions rounded to 1 decimal place.) Double decline Schedule Total Start of Year Book Value Depreciation Tax Shields at 40% To PV (Tax Shields at 12% Answer is not complete. Year Year Year Year Year Year Year Year Year Year 1 2 3 4 5 6 7 9 10 $ 112$ 90$ 72$ 5.7$ 4.6 $ 3.7$ 29$ 23 1.9 $ 1.5 X $ 22$ 1.8 $ 14$ 1.1 $ 0.9 $ 0.7 0.63 $ 0.5 $ 0.4 $ 0.3 $0.9 $ 0.7$ 0.6$ 0.5 $ 04 03 02 02 $ 0.2 $ 0.1 $ 0.8 $ 0.6 ls 0.4 ls 0.3 0.23 0.1 0.1 0.1 0.1 0.0 . - A @ $ % & 7 2 4 8 0 3 5 6 9 T W L Y Y E 0 R U c H KL