Trenton Fabrication Company purchased industrial tools costing $160,000, which fall in the 3-year property class under MACRS.

a.The firm uses the accelerated depreciation schedule specified by MACRS

b.

The firm uses the optional straight-line depreciation method and the half-year convention. For years 1 through 4. C. Calculate the present value of the depreciation tax shield under each depreciation method listed in part (1). Trenton Fabrication Companys after-tax hurdle rate is 16 percent, and the firms tax rate is 30 percent.