Your firm needs a computerized machine tool lathe which costs $53,000 and requires $12,300 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 34 percent and a discount rate of 12 percent.Calculate the depreciation tax shield for this project in year 3.

Respuesta :

Answer:

The depreciation tax shield for this project in year 3 is $2668.76

Explanation:

Depreciation in year 3 = 14.81%*53000

                                      = $7849.3

tax shield will = $7849.3*34%

                       = $2668.76

therefore, The depreciation tax shield for this project in year 3 is $2668.76