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Markov Manufacturing recently spent $10.8 min to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have

Markov Manufacturing recently spent $10.8 min to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a used ole of five years, and its marginal corporals lax tale is 21%. The company plans to use straight-ins deprecato a. What is the annual deprecation expense associated with this equipment What is the annual depreciation tax shield? than straight line depreciation, suppose Markov wil use the MACRS depreciation method for the five-year ifle of the property Calculate the depreciation taxshisid each year for this equipment under this accelerated depreciation d. If Manov sa choice between straight-ahe and MACRS depreciation schedules, and marginal corporate tax rate is expected to remain constant, which aches should choose? Why? w. How might your answer to part (d) change if Markov anticipetes that ta marginal corporate tax rate will increase substantially over the next five yaars? Note: Assume that the equipment is put into use in year What is the arrual depreciation expose associated with this equipment The annual depreciation expense is milion (Round to three decimal places) What is the annual depreciation tax shield The annual depreciation tax shelt is mition (Round to three decimal places.) Hather than straight-line depreciation suppose Markoy will use the MACRS depreciation method for the five-year we of the property Calculate the depreciation tax shed each year for this equimost under this occelerated deprin The depreciation tax shield or year 1 mon (Round to three decimal places) The depreciation tas sheld for year 21 milion. Round to three decimal places) The depreciation tax shield for year 3 is Smition Round to tree decimal places) The depreciation tax shed for year & millen (Round to three decimal places) The depreciation shield for year 5 milion (Round to three decimal places) The direction held for year 6 million (Round to the decimal) d. If Markov has a choice between straight-line and MACRS depreciation schedules, and to marginal corporate tax rate expected to remain constant, which schedule should choose? Why? Select the beat choice below)

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