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Handy Wrappers is considering investing in a piece of machinery which will cost $500,000. It will provide an additional $160,000 is additional sales each year and its annual operating expenses are expected to be $35,000. The machine will be depreciated on a straight-line basis over a 10 year life with no estimated salvage value. The company has a 40% tax rate and its required rate of return is 16%. How much is the annual depreciation tax shield?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M949134

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