Calculate depreciation tax shield for project in year three

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Reference no: EM131331044

Your firm needs a computerized machine tool lathe which costs $55,000 and requires $12,500 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 34 percent and a discount rate of 13 percent.

Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.)

Depreciation tax shield $

Reference no: EM131331044

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