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You purchase equipment valued at $1,365,000 for a five-year project. Your firm uses straight-line depreciation for five years. Your marginal tax rate is 35%. What

You purchase equipment valued at $1,365,000 for a five-year project. Your firm uses straight-line depreciation for five years. Your marginal tax rate is 35%.

What is your annual depreciation?

What is the tax shield generated from this investment each year?

Annual depreciation x marginal tax rate= tax shield generated

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