Question
Your firm needs a computerized machine tool lathe which costs $50,000, and requires $12,000 in maintenance for each year of its 3 year life. After
Your firm needs a computerized machine tool lathe which costs $50,000, and requires $12,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% and a discount rate of 12%. What is the depreciation tax shield for this project in year 3? Select the range that includes the correct solution. See MACRS table below.
Year | Depreciation % |
1 | 33% |
2 | 45% |
3 | 15% |
4 | 7% |
Group of answer choices
Less than $2,500
Greater than or equal to $2,500 but less than $2,600
Greater than or equal to $2,600 but less than $2,700
Greater than or equal to $2,700 but less than $2,800
Greater than or equal to $2,800
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