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Rush Corporation plans to acquire production equipment for $645,000 that will be depreclated for tax purposes as follows: year 1, $129,000; year 2, $219,000; and
Rush Corporation plans to acquire production equipment for $645,000 that will be depreclated for tax purposes as follows: year 1, $129,000; year 2, $219,000; and in each of years 3 through 5, $99,000 per year A 10 percent discount rate is appropnare for this asset, and the company's tax rate is 40 percent. Use Exhibit A and Exhibit A9 Required a. Compute the present value of the tax shield resulting from depreciation. (Round PV factor to 3 decimal places and other intermediate caleulations to nearest whole number.) b. Compute the present value of the tax shield from depreciation assurming straighl-line depreciation ($129,000 per year). (Round PV factor to 3 decimal places and other intermediate calculations to nearest whole number.) the t
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