How do you get the 160,000

bbhosted cuny.edu Use the following information to answer questions #1 through #5. The managers of PonchoParts, Inc. plan to manufacture engine blocks for classic cars from the 1960s era. They expect to sell 250 blocks annually for the next 5 years. The necessary foundry and machining equipment will cost a total of $800,000 and will be depreciated on a straight-line basis to zero over the project's life. The firm expects to be able to dispose of the manufacturing equipment for $150,000 at the end of the project. Labor and materials costs total S500 per engine block, fixed costs are $125,000 per year. Assume a 35% tax rate and a 12% discount rate. a. b. C. d. What is the annual depreciation tax shield for this project? S 20,000 S 56,000 $100,000 $104,000 $120,000 Depreciation tax shield- 160,000 35 56000