Depreciation; PV

Yankee Freight provides truck freight services throughout the northeast United States. The firm is considering an investment in improved logistics management requiring a main$-$frame

computer and communications software, which would cost $$1,030,000$ and have an expected life of eight years. For tax purposes, the investment will be depreciated using the straight$-$line

method, with no salvage value. The company's cost of capital and tax rates are $8$ and $30$ percent, respectively.

a$.$ Compute the present value of the depreciation tax benefit.

Note: Round your final answer to the nearest whole dollar.

$

b$.$ Assume instead that Yankee Freight uses the double$-$declining$-$balance method of depreciation for tax purposes with a five$-$year life. Compute the present value of the depreciation tax

benefit.

Note: Round your final answer to the nearest whole dollar.

$$

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