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markov manufacturing recently spent 11.3 million to purchase some equipment used in the manufactuee of disk drives. the dirm expects that this equipment will have
markov manufacturing recently spent 11.3 million to purchase some equipment used in the manufactuee of disk drives. the dirm expects that this equipment will have a usedul live of five years, and its marginal corporate tax taye is 21%. the company plans to use straight line depreciatiom.
a) what is the annual depreciation expense associated with this equipment?
b) what is rhe annu depreciation tax shield?
c) rather thwn straight-line depreciation, suppose markov will use the marcs depreciation method for the five year life of property. calculate the depreciation tax shield each year flr this equipment under this accelrated deprecation schedule.
d) if markov has a choice between straigt line and marcs depreciatiom schedule, and its marginal coporate tax rate is expected to remain constant, which schedule should it choose?why?
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