Rush Corporation plans to acquire production equipment for $630,000 that will be depreciated for tax purposes as follows: year 1, $126,000; year 2, $216,000; and in each of years 3 through 5, $96,000 per year. An 8 percent discount rate is appropriate for this asset, and the company's tax rate is 40 percent. UseExhibit A.8andExhibit A.9.

Required:

a.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.)

b.Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($126,000 per year).