Your Firm Needs a Machine Which Costs $50,000, and Requires

Your firm needs a machine which costs $50,000, and requires $2,000 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 21 percent and a discount rate of 10 percent. What is the depreciation tax shield for this project in year 3?

A) $1,555.05
B) $3,291.75
C) $4,813.25
D) $5,833.33

Correct Answer:

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