Calculate the present value of the depreciation tax shield

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Calculate the present value of the depreciation tax shield for an asset in the 3-year class life costing $100,000. Three-year class percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively for years 1 through 4. The firm has a 35% tax rate and a 10% cost of capital.Compare this present value to that calculated for straight-line depreciation with no salvage value.

Reference no: EM13577343

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