Trenton Fabrication Company purchased industrial tools costing $170,000, which fall in the 3-year property class under MACRS.

Use Appendix A and Exhibit 16-9 for your reference.

(Use appropriate factor(s) from the tables provided.). (Round your final answers to the nearest dollar amount.)

Apendix A is a Present Value Table. Exhibit 16-9 is a MACRS table

1. Prepare a schedule of depreciation deductions assuming:

a. The firm uses the accelerated depreciation schedule specified by MACRS Year Accelerated Depreciation 1 2 3 4

b. The firm uses the optional straight-line depreciation method and the half-year convention.

Year Straight-Line Depreciation 1 2 3 4 2.

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 12 percent, and the firms tax rate is 30 percent.

Present Value of Depreciation Tax Shield Under MACRS

Accelerated depreciation Under MACRS Straight-line depreciation