Question: 7. What is the present value at a 10% discount rate of the depreciation tax shield for a firm in the 30% tax bracket that

7. What is the present value at a 10% discount rate of the depreciation tax shield for a firm in the 30%

tax bracket that purchases a $100,000 asset depreciated straight-line over a five-year life to a zero

salvage value? Compute the depreciation tax shield per year and discount this annuity to today.

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