Question: 2. (2 points) Suppose that an asset with a cost basis of $100,000 and an ADS recovery period of five years is being depreciated

2. (2 points) Suppose that an asset with a cost basis of $100,000 and an ADS recovery period of five years is being depreciated under the Alternate Depreciation System (ADS) of MACRS, as follows: Year 5 Depreciation Deduction $10,000 $20,000 $20,000 $20,000 $20,000 $10,000 If the firm's effective income tax rate remains constant at 30% during this six-year period, what is the PW of after-tax savings resulting from depreciation when MARR = 15% per year (after taxes)?
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