Problem 6-18 Depreciation and project NPV Suppose that Sudbury Mechanical Drifters is proposing to invest $11.4 million in a new factory. It can depreciate this investment straight-line over 10 years. The tax rate is 35%, and the discount rate is 10% a. What is the present value of Sudbury's depreciation tax shields? (Enter your answers in millions rounded to 1 decimal place.) Stralahteline Schedule Year Year Straight-line, 10-year Tax Shields at 35% TC PV (Tax Shields) at $ 1.1 $ 1. 1 $ 0.40$ 0. 4 $ 0.40 $ 0.3 X Answer is complete but not entirely correct. Year Year Year Year Year Year Year Year 7 8 fear 9 Year 10 Total 5 1.10 $ 1. 1 5 1. 1 1.1 $ 1. 1 5 1.1 1.1 $ 1. 1 5 11.4 5 0. 45 0.40 $ 0.405 040$ 0. 43 0.405 40$ 0.404.00 0.30 $ 0.3 $ 0.20 0.20 0.20 0.20 02 $ 0.20 $ 2.5 b. Suppose that the government allows companies to use double-declining-balance depreciation with the option to switch at any point to straight-line. Now what is the present value of the depreciation tax shields? (Enter your answers in millions rounded to 1 decimal place.) Double decline Schedule Start of Year Book Value Depreciation Tax Shields at 35% TC PV (Tax Shields) at 10% * Answer is complete but not entirely correct. ear Year Year Year Year Yar Yar Yar Yar Yar Year Year Year Year Year Year Total 7 8 9 10 Total $11.40 $ 9.10 $ 7.30 S 5.8 $ 4.70 $ 3.70 $ 3.00 $ 24% $ 1.39 S 1.5% 5 50.8% $ 23 $ 1.8 $ 1.50 $ 1.2 $0. $ 0.7 0 05 $ 0.4% $ 0.3% $ 10.2% $ 0.8 $ 0.6 0.50 $ 0.40 $ 0.3 $ 03 $ 02 $ 02 $ 0.1 $ 0.1 $ 3.6% $ 0. 7 8 0.50 $ 0.4 $ 03 $ 0. 2 8 0. 1 0. 1 0. 1 8 0.10 $0.00 $ 25% c. What would be the present value of the tax shield if the government allowed Sudbury to write-off the factory immediately? (Enter your answer in millions rounded to 1 decimal place.) Answer is complete and correct. Percent value of depreciation tax shields $ 4.00