Peter Pontificator Is Proposing to Purchase a Paddle Machine,which

Multiple Choice

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:

A) $287,506
B) $230,005
C) $286,513
D) $229,211
E) none of the above