Suppose That a Project Has a Depreciable Investment of $1,000,000

question 57

Multiple Choice

Suppose that a project has a depreciable investment of $1,000,000 and falls under the following MACRS year 5 class depreciation schedule:
Year 1: 20 percent; year 2: 32 percent; year 3: 19.2 percent; year 4: 11.5 percent; year 5: 11.5 percent; and year 6: 5.8 percent.
Calculate the depreciation tax shield for year 2 using a tax rate of 30 percent.

• A)$224,000
• B)$60,000
• C)$96,000
• D)$300,000