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What is the tax shield

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Question - Joi Co Ltd is considering purchasing a new machine to manufacture products. The machine will cost $80,000 and has an 8 year useful life. After 8 years it has zero residual value. The company uses straight line depreciation. The tax rate is 30%. What is the tax shield (annual cash saving based on tax) that the company can apply as a cash flow in its NPV calculation?

Reference no: EM132708413

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