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Your firm needs a machine which costs $210,000, and requires $36,000 in maintenance for each year...

Your firm needs a machine which costs $210,000, and requires $36,000 in maintenance for each year of its 7 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 7-year class life category. Assume a tax rate of 40% and a discount rate of 15%. What is the depreciation tax shield for this project in year 7?

Multiple Choice

  • $5,509.35

  • $22,037

  • $36,729

  • $14,691.60

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