Question: Jasper Manufacturing is starting a new project which will require the acquisition of new fixed assets costing $127,000. The assets will have a 5-year life

Jasper Manufacturing is starting a new project which will require the acquisition of new fixed assets costing $127,000. The assets will have a 5-year life after which time they will be worthless. The assets belong in a 25 percent CCA class. The assets can be leased for $27,900 a year. The firm can borrow money at 11 percent and has a 34 percent tax rate.

What is the amount of the depreciation tax shield in year 3?

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