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Calculate the depreciation tax shield for year

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Question - Manufacturing company recently spent $ 14.3 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 40 %. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the 5-year life of the property. Calculate the depreciation tax shield for year 1 and for the year 2 under this accelerated depreciation schedule (rounded to 3 decimal places).

Reference no: EM132164790

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