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Delta Inc. is evaluating a new product. The production line for the new product would be set up in an unused plant, which was purchased
Delta Inc. is evaluating a new product. The production line for the new product would be set up in an unused plant, which was purchased one year ago at $300,000. The machinery will cost $220000. The company's inventories would have to be increased by $25000 to handle the new line. The machinery is in Class 43 with a depreciation rate of 30%. The project is expected to last 3 years with estimated EBITDA of $180000 in each year. The machinery has an expected salvage value of $25000 at the end of three years. The company's tax rate is 30% and its weighted average cost offapital is 10%. What is the tax shield of the depreciation in year 2 ? Round to the nearest dollar. For example, if your answer if 98765.4321, enter 98765 without the dollar sign. Your
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