Problem $6-12$ Taxes and project NPV

Suppose that Sudbury Mechanical Drifters is proposing to invest $$20\mathrm{.}0$ million in a new factory. It can depreciate this investment

straight$-$line over $10$ years. The tax rate is $40\%,$ and the discount rate is $10\%.$

a$.$ What is the present value of Sudbury's depreciation tax shields?

b$.$ What would be the present value of the tax shield if the government allowed Sudbury to write$-$off the factory immediately?

Complete this question by entering your answers in the tabs below.

What is the present value of Sudbury's depreciation tax shields?

Note: Enter your answers in millions rounded to $1$ decimal place.Problem $6-12$ Taxes and project NPV

Suppose that Sudbury Mechanical Drifters is proposing to invest $$20\mathrm{.}0$ million in a new factory. It can depreciate this investment

straight$-$line over $10$ years. The tax rate is $40\%,$ and the discount rate is $10\%.$

a$.$ What is the present value of Sudbury's depreciation tax shields?

b$.$ What would be the present value of the tax shield if the government allowed Sudbury to write$-$off the factory immediately?

Complete this question by entering your answers in the tabs below.

What is the present value of Sudbury's depreciation tax shields?

Note: Enter your answers in millions rounded to $1$ decimal place.