Holly Manufacturing recently spent $13 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 30% and Holly's marginal corporate tax rate is 37%.

d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 10% per year?

e. How might your answer to part (d) change if Holly anticipates that its marginal corporate tax rate will increase substantially over the next five years?