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Tippet Inc. is considering the purchase of a new machine, which costs $350000. The machine is expected to be depreciated on a straight line basis
Tippet Inc. is considering the purchase of a new machine, which costs $350000. The machine is expected to be depreciated on a straight line basis over the useful life of 5 years with no residual value. If the company has a cost of capital of 8% and a 40% tax rate, what is the present value of the annual depreciation tax shield that the purchase of the machine will generate. Please show all work.
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