dont forget to solve for the totals Problem 6-18 Depreciation and pr.docx - dont forget to solve for the totals Problem 6-18 Depreciation and project

# Dont forget to solve for the totals Problem 6-18 Depreciation and pr.docx

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dont forget to solve for the totals Problem 6-18 Depreciation and project NPV Suppose that Sudbury Mechanical Drifters is proposing to invest \$10.7 million in a new factory. It can depreciate this investment straight-line over 10 years. The tax rate is 40%, and the discount rate is 12%. a. What is the present value of Sudbury's depreciation tax shields? (Enter your answers in millions rounded to 1 decimal place.) Straight-line Schedule Total Year 1 \$ 1.1 \$ 0.4 \$ 0.4 Straight- line, 10-year Tax Shields at 40% TC PV (Tax Shields) at 12% Year 2 \$ 1.1 \$ 0.4 \$ 0.3 Year 3 \$ 1.1 \$ 0.4 \$ 0.3 Year 4 \$ 1.1 \$ 0.4 \$ 0.3 Year 5 \$ 1.1 \$ 0.4 \$ 0.2 Answer is not complete. Year Year Year 6 7 8 \$ 1.1 \$ 1.1 \$ 1.1 \$ 0.4 \$ 0.4 \$ 0.4 \$ 0.2 \$ 0.2 \$ 0.2 Year 9 \$ 1.1 \$ 0.4 \$ 0.2 Year 10 \$ 1.1 \$ 0.4 \$ 0.1

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• Fall '12
• SMITH