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Your firm needs a machine which costs $125,000, and requires $10,000 in maintenance for each year of its 3-year life. After 4 years, this machine
Your firm needs a machine which costs $125,000, and requires $10,000 in maintenance for each year of its 3-year life. After 4 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 20% and a discount rate of 15%. What is the depreciation tax shield for this project in year 4? Year 3-Year 1 33.33% 2 44.45% 3 14.81% 4 7.41% $18,512.50 $8,332.50 O $1,852.50 O $3,702.50
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