Question: Problem 6 - 1 2 Taxes and project NPV Suppose that Sudbury Mechanical Drifters is proposing to invest $ 5 5 . 0 million in

Problem 6-12 Taxes and project NPV
Suppose that Sudbury Mechanical Drifters is proposing to invest $55.0 million in a new factory. It can depreciate this investment straight-line over 10 years. The tax rate is 40%, and the discount rate is 10%.
a. What is the present value of Sudbury's depreciation tax shields?
b. What would be the present value of the tax shield if the government allowed Sudbury to write-off the factory immediately?
Problem 6-12 Taxes and project NPV Suppose that Sudbury Mechanical Drifters

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