Question: Licorne Inc. is considering a project which would involve the purchase of new manufacturing equipment at a cost of $8,640. The equipment would be depreciated
Licorne Inc. is considering a project which would involve the purchase of new manufacturing equipment at a cost of $8,640. The equipment would be depreciated on a straight-line basis to a book value of $503 over its 7-year useful life. The firm's marginal tax rate is 35%. The amount of the annual depreciation tax shield that should be included as part of the project's cash flows would be $_______.
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