Your Firm Needs a Machine Which Costs $500,000, and Requires

question 115

Multiple Choice

Your firm needs a machine which costs $500,000, and requires $10,000 in maintenance for each year of its three-year life. After three years, this machine will be replaced. The machine falls into the MACRS three-year class life category. Assume a tax rate of 35 percent and a discount rate of 15 percent. What is the depreciation tax shield for this project in year 3?

• A)$7,219.88
• B)$24,500.00
• C)$25,917.50
• D)$48,132.50

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