Seeing Red has a new project that will require fixed assets of $885,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company has a tax rate of 21 percent. What is the depreciation tax shield for Year 3?

Multiple Choice

1. $70,800

2. $113,280

3. $59,000

4. $40,781

5. $35,683