Peter Pontificator Is Proposing to Purchase a Paddle Machine,which

Multiple Choice

Peter Pontificator is proposing to purchase a paddle machine,which will cost $5 million,last ten years and have a salvage value of $80,000.Given a tax rate of 21%,and a cost of capital of 8%: What is the present value of the tax shield if straight-line depreciation is used?

A) $600,000
B) $643,234
C) $745,671
D) $693,286
E) None of the above