Problem 6-18 Depreciation and project NPV Suppose that Sudbury Mechanical Drifters is proposing to invest $11.6 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? (Enter your answers in millions rounded to 1 decimal place.) Straight-line Schedule Straight-line, 10-year Tax Shields at 40% To PV (Tax Shields) at 10% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total $ 1.2 $ 1.25 1.25 1.25 1.25 1.25 1.2 $ 1.25 1.25 1.2 5 11.6 $ 0.55 0.53 0.51 $ 0.5l s 0.55 0.55 0.51 $ 0.51 $ 0.51 $ 0.51 $ 4.81 0.4 $ 0.3 S 0.31 $ 0.21 $ 0.21 $ 0.21 $ 0.1 $ 0.1 0.15 0.1 $ 2.0 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 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Start of Year Book Value Depreciation Tax Shields at 40% To PV (Tax Shields) at 10% 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.) Percent value of depreciation tax shields