Question: Your firm needs a computerized machine tool lathe which costs $ 4 4 , 0 0 0 and requires $ 1 1 , 4 0

Your firm needs a computerized machine tool lathe which costs $44,000 and requires $11,400 in maintenence for each year of its 3 year life. After three years, this machine will be replaced. The machine falls into the MACRS 3 year class life category, and neither bonus depreciation nor section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 11 percent. Calculate the depreciation tax shield for this project in year 3.

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