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the cost of capital is 12 percent. You must use the Exhibit 19B.1 and Exhibit 19B.2 present value tables and Exhibit 19.5 to solve the

image text in transcribed the cost of capital is 12 percent. You must use the Exhibit 19B.1 and Exhibit 19B.2 present value tables and Exhibit 19.5 to solve the following problems. Required: 2. Calculate the present value of the tax depreciation shield, assuming that MACRS is used. Round intermediate calculations and your final answer to the nearest dollar. 3. What is the benefit to the company of using MACRS? MACRS increases the amount of depreciation tax savings in the earlier years Feedback Check My Work 1. Remember the after tax cash flow from depreciation (the tax depreciation shield) is the depreciation times the tax rate. 2. MACRS will normally result in more dollars of depreciation tax shield in the early years over the straight line method

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