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The company uses straight-line method to calculate its

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Kahn Industry, Inc. decides to add a new machine to its assembly line. The new machine costs $120,000 with a useful life of 6 years and no salvage value. The new machine is expected to bring cash inflows of $80,000 while incurring cash outflows of $50,000 every year. The company uses straight-line method to calculate its depreciation. The tax rate is assumed to be 40 percent.

Required:

Determine the tax shield of the purchase.

Reference no: EM13574314

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