Markov Manufacturing recently spent $11 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five? years, and its marginal corporate tax rate is 29%.

The company plans to use straight-line depreciation.

a. What is the annual depreciation expense associated with this? equipment?

b. What is the annual depreciation tax shield?

c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for five-year property. Calculate the depreciation tax shield each year for this equipment under this accelerated depreciation schedule.

d. If Markov has a choice between straight-line and MACRS depreciation? schedules, and its marginal corporate tax rate is expected to remain? constant, which should it? choose? ? Why?  

e. How might your answer to part (d) change if Markov anticipates that its marginal corporate tax rate will change substantially over the next five? years?

a. What is the annual depreciation expense associated with this? equipment?

The annual depreciation expense is

?$

million.  ?(Round to three decimal? places.)