Your firm needs a computerized machine tool lathe that costs $50,000, requires $10,000 in installation, $5,000 in
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Question:
Your firm needs a computerized machine tool lathe that costs $50,000, requires $10,000 in installation, $5,000 in freight charges, and another $12,000 in maintenance for each year of its three-year life. After three years, this machine will be replaced. The machine falls into the MACRS three-year class life category. Assume a tax rate of 30 percent and a discount rate of 12 percent. Calculate the depreciation tax shield for this project in year 1.
$6,499.35
$6,886.00
$5,999.40
$5,554.40
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