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What the total tax shield created by depreciation is

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Arsenal Company is considering an investment in equipment costing $30,000 with a five-year life and no salvage value. Arsenal uses straight-line depreciation and is subject to a 35 percent tax rate. The expected net cash inflow before depreciation and taxes is projected to be $20,000 per year.

Problem 1: Over the life of the project, the total tax shield created by depreciation is:

Reference no: EM132782373

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