Question: Your firm needs a computerized machine tool lathe which costs $80,000, and requires $12,000 in maintenance for each year of its 3 year life. After

Your firm needs a computerized machine tool lathe which costs $80,000, and requires $12,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 30% and a discount rate of 12%. Calculate the depreciation tax shield for this project in year 1.

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