Question: Peter Pontificator is proposing to purchase a paddle machine. which will cost $1 million. last eight years and have a salvage value of 20%. Given

Peter Pontificator is proposing to purchase a paddle machine. which will cost $1 million. last eight years and have a salvage value of 20%. Given a tax rate of 35%. and a cost of capital of 6%:

If double-declining balance depreciation is used. and PP switches to straight-line depreciation in year 6. the present value of the depreciation tax shield is:

- $287,506

-$230,005

- 286,513

- $229,211

- none of the above

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