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What the present value of the depreciation tax shield

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Question - Peter Pontificator is proposing to purchase a paddle machine, which will cost $1 million, last eight years and have a salvage value of 20%. Given a tax rate of 35%, and a cost of capital of 6%: If double-declining balance depreciation is used, and PP switches to straight-line depreciation in year 6, what the present value of the depreciation tax shield?

Reference no: EM133025572

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