A2. (MACRS Depreciation)
Corporate Financial Management (3rd Edition)
Emery, Douglas R., Finnerty, John D., & Stowe, John D. (2007)
Individual assignment: Text Problem Set IV:
Chapter 10, Problems
A2. (MACRS Depreciation) Modigliani Jet Ski Company has purchased several firm cars for a total of $150,000. They are classed as five-year property.
a. What is the annual depreciation charge for these assets?
b. If Modigliani's marginal tax rate is 40%, what is the annual depreciation tax shield?
c. Discounted at 8%, what is the present value of the depreciation tax shields?
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