Calculate the depreciation tax shield

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Reference no: EM13263412

Your firm needs a computerized machine tool lathe which costs $50,000, requires $10,000 in installation and another $12,000 in maintenance for each year of its 3-year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 30% and a discount rate of 12%. Calculate the depreciation tax shield for this project in year 1.

$7,199.20
$8,886.00
$5,999.40
$6,554.40

Reference no: EM13263412

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