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Velasco Land Company is considering a project which will require the purchase of $1.4 million in new 5-Year MACRS equipment. The MACRS rates are 20
Velasco Land Company is considering a project which will require the purchase of $1.4 million in new 5-Year MACRS equipment. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. Ignore bonus depreciation. The firm desires a minimal 14 percent rate of return and has a combined tax rate of 25 percent. What is the value of the depreciation tax shield in Year 2 of the project?
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$107,500
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$90,400
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$89,600
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$123,416
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$112,000
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