Calculate the PVs of depreciation tax shields in the five-year and seven-year classes shown in Table 6.4. Assume the tax rate is 35% and the discount rate is 10%. Lastly, assume the asset in question costs $1. (Do not round intermediate calculations. Round your answers to 3 decimal places.)

TABLE 6.4 Tax depreciation allowed under the modified accelerated cost recovery system (MACRS) (figures in percent of depreciable investment) Notes: . Tax depreciation is lower in the Tax Depreciation Schedules by Recovery-Period Class Year(s)3-year 5-ye 7-year10-year 15-year 20-year 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46 5.00 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 3.75 7.22 6.68 6.18 5.71 5.28 4.89 4.52 4.46 4.46 4.46 4.46 4.46 4.46 4.46 4.46 4.46 2.23 33.33 44.45 14.81 7.41 20.00 32.00 19.20 11.52 11.52 5.76 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 first and last years because assets are assumed to be in service for only six months. 10 10 2. Real property is depreciated straight-line over 27.5 years for residential property and 39 years for nonresidential property 12 13 14 13 eXcel 16 17 18 15 16 17-20 21 Visit us at www.mhhe.com/bma