Question: Just the one's that are wrong please :) 7 Suppose that Sudbury Mechanical Drifters is proposing to invest $12.0 million in a new factory. It

Just the one's that are wrong please :)

Just the one's that are wrong please :) 7 Suppose that SudburyMechanical Drifters is proposing to invest $12.0 million in a new factory.

7 Suppose that Sudbury Mechanical Drifters is proposing to invest $12.0 million in a new factory. It can depreciate this investment straight-line over 10 years. The tax rate is 35%, and the discount rate is 10%. b. Suppose that the government allows companies to use double-declining-balance depreciation with the option to switch at any point to straight-line. Now what is the present value of the depreciation tax shields? (Enter your answers in millions rounded to 1 decimal place.) X Answer is complete but not entirely correct. Double decline Schedule Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Start of Year Book Value $ 12.0 $ 9.6 $ 7.7 $ 6.1 $ 4.9 $ 3.9 Year Year Year Year Total 7 8 9 10 $ 3.1 $ 2.5 X $ 2.0 X $ 1.6 X $ 12.0 X $ 0.6 X $ 0.5 X $ 0.4 X $ 0.3 X $ 10.7 X $ 0.2 $ 0.2 X $ 0.1 X $ 0.1 X $ 3.7 X $ 0.1 $ 0.1 $ 0.1 $ 0.0 X $ 2.7 X $ 2.4 $ 1.9 $ 1.5 $ 1.2 $ 1.0 $ 0.8 Depreciation Tax Shields at 35% TC $ 0.8 $ 0.7 $ 0.5 $ 0.4 $ 0.3 $ 0.3 PV (Tax Shields) at 10% $ 0.8 $ 0.6 $ 0.4 $ 0.3 $ 0.2 $ 0.2

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