Five years ago they purchased 4 new barges for $2 million each which they are able to depreciate for tax purposes at 10% per annum straight-line. At this time (i.e., five years ago), 4 barges were sold and four others had extensive renovations. This meant the renovated barges had a useful life of 8 years and a value for taxation depreciation purposes of $300,000 each. They are able to be depreciated for tax purposes for 8 years straight line. Dana thought it was interesting and helpful that the taxation depreciation was at the same rate as the accounting depreciation. If the expected project (see below) goes ahead these above mentioned barges can be sold today for 20% of their original cost. For taxation purposes the full amounts of the tax base are depreciated with no allowance for residual value. The barges purchased five years ago are expected to have a salvage value of $100,000 each at the end of their 10 year useful life and the renovated barges a salvage value of $30,000 each at the end of their 8 year useful life. If the existing operation continues, these barges can be sold for the salvage values at the end of their respective useful life.

If these 8 barges are all sold, what is the selling price? and tax shield