Your firm needs a computerized machine tool lathe that costs $50,000, requires $10,000 in installation, $5,000 in freight charges, and another S12,000 in maintenance for each year of its three-year life. After three

years, this machine will be replaced. The machine falls into the MARS three-year class life category. Assume a tax rate of 21 percent and a discount rate of 12 percent. Calculate the depreciation tax shield for this

project in year 1.

a. $21,664.50

b. $4,549.55

c. $6.886.00

d. $5,999.40