Mind Challenge, Inc., publishes innovative science textbooks for public schools. The companys management recently acquired the following two new pieces of equipment.

• Computer-controlled printing press: cost, $279,000; considered to be industrial equipment; expected useful life, 12 years.
• Duplicating equipment to be used in the administrative offices: considered to be office equipment; cost, $61,200; expected useful life, six years.

The company uses straight-line depreciation for book purposes and the MACRS accelerated depreciation schedule for tax purposes. The firms tax rate is 30 percent; its after-tax hurdle rate is 10 percent. Neither machine has any salvage value. Use Appendix A and Exhibit 16-9 for your reference. (Use appropriate factor(s) from the tables provided.) Required: For each of the publishing companys new pieces of equipment: 1. Prepare a schedule of the annual depreciation expenses for book purposes. 2. Determine the appropriate MACRS property class. 3. Prepare a schedule of the annual depreciation expenses for tax purposes. 4. Compute the present value of the depreciation tax shield.

Mind Challenge, Inc., publishes innovative science textbooks for public schools. The companys management recently acquired the following two new pieces of equipment.

• Computer-controlled printing press: cost, $279,000; considered to be industrial equipment; expected useful life, 12 years.
• Duplicating equipment to be used in the administrative offices: considered to be office equipment; cost, $61,200; expected useful life, six years.

The company uses straight-line depreciation for book purposes and the MACRS accelerated depreciation schedule for tax purposes. The firms tax rate is 30 percent; its after-tax hurdle rate is 10 percent. Neither machine has any salvage value.

Year	Straight-Line Depreciation for Book Purposes	MACRS Depreciation						Cash Flow: Tax Savings	Discount Factor	Present Value
1	$23,250		x		%	=
2	23,250		x		%	=
3	23,250		x		%	=
4	23,250		x		%	=
5	23,250		x		%	=
6	23,250		x		%	=
7	23,250		x		%	=
8	23,250		x		%	=
9	23,250
10	23,250
11	23,250
12	23,250
Present valueof tax shield

Year	Straight-Line Depreciation for Book Purposes	MACRS Depreciation						Cash Flow: Tax Savings	Discount Factor	Present Value
1	$10,200		x		%	=
2	10,200		x		%	=
3	10,200		x		%	=
4	10,200		x		%	=
5	10,200		x		%	=
6	10,200		x		%	=
Present value of tax shield