Your Firm Needs a Machine Which Costs $20,000, and Requires

question 39

Multiple Choice

Your firm needs a machine which costs $20,000, and requires $1,000 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 40 percent and a discount rate of 9 percent. What is the depreciation tax shield for this project in year 3?

• A)$1,184.80
• B)$1,777.20
• C)$3,640.00
• D)$4,000.00

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A cognitive framework or concept that helps organize and interpret information, influencing perception and understanding.

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