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Manufacturing company recently spent $ 14.3 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will
Manufacturing company recently spent $ 14.3million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of fiveyears, and its marginal corporate tax rate is40 %. Rather thanstraight-line depreciation, suppose Markov will use the MACRS depreciation method for the5-year life of the property. Calculate the depreciation tax shield for year 3 and for the year 4 and 5 under this accelerated depreciation schedule(rounded to 3 decimal places).
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