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Suppose that Sudbury Mechanical Drifters is proposing to invest $10.3 million in a new factory. it can depreciate this investment straight-line over 10 years. The

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Suppose that Sudbury Mechanical Drifters is proposing to invest $10.3 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.) Might-lino Bohodulo Your 1 Your 2 Your 3 Your 4 Your 5 Your 8 Your 7 Your 3 Your 9 Your 10 Total Straightline, 1(Hrear Tax Shields at 40% To P'.' {Tax Shields) at 10% 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%

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