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Rush Corporation plans to acquire production equipment for $602,500 that will be depreciated for tax purposes as follows: year 1, $120,500; year 2, $210,500;
Rush Corporation plans to acquire production equipment for $602,500 that will be depreciated for tax purposes as follows: year 1, $120,500; year 2, $210,500; and in each of years 3 through 5, $90,500 per year. A 6 percent discount rate is appropriate for this asset. and the company's tax rate is 40 percent. Use Exhibit A.8 and Exhibit A.9. Required: a. Compute the present value of the tax shield resulting from depreciation. b. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($120,500 per year). Complete this question by entering your answers in the tabs below. Required A Required B Compute the present value of the tax shield resulting from depreciation. (Round PV factor to 3 decimal places and other intermediate calculations to nearest whole number.) Present value of the tax shield
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