Present value of the depreciation tax shield

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Paul Porter is proposing to purchase a 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, the present value of the depreciation tax shield is _________.

Reference no: EM13146301

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