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Peter Pontificator Is Proposing to Purchase a Paddle Machine, Which

Question 8

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%: What is the present value of the tax shield if straight-line depreciation is used?


A) $261,261
B) $271,679
C) $240,700
D) $217,343
E) None of the above

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