A2. (MACRS depreciation) Modigliani Jet Ski Company has purchased several firm cars for a
total of $150,000. They are classed as five-year property.
a. What is the annual depreciation charge for these assets?
b. If Modigliani’s marginal tax rate is 40%, what is the annual depreciation tax shield?
c. Discounted at 8%, what is the present value of the depreciation tax shields?
CLICK HERE FOR THE SOLUTION
