Markov Manufacturing recently spent $$16\mathrm{.}4$ million to purchase some

equipment used in the manufacture of disk drives. The firm expects that this

equipment will have a useful life of five years, and its marginal corporate tax

rate is $21\%.$ The company plans to use straight$-$line depreciation.

a$.$ What is the annual depreciation expense associated with this equipment?

b$.$ What is the annual depreciation tax shield?

c$.$ Rather than straight$-$line depreciation, suppose Markov will use the MACRS

depreciation method for the five$-$year life of the property. Calculate the

depreciation tax shield each year for this equipment under this accelerated

depreciation schedule.

d$.$ If Markov has a choice between straight$-$line and MACRS

depreciation schedules, and its marginal corporate tax rate is expected to

remain constant, which schedule should it choose? Why?

e$.$ How might your answer to part $($d$)$ change if Markov anticipates that its