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Tax savings from the depreciation tax shield

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72. Suppose a machine that costs $80,000 has a useful life of 10 years. Also suppose that depreciation on the machine is $8,000 for tax purposes in year 4. The tax rate is 40%. The tax savings from the depreciation tax shield in year 4 would be:
A) $4,800 inflow. C) $4,800 outflow.
B) $3,200 inflow. D) $3,200 outflow.

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Calculates tax savings from the depreciation tax shield.

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72. Suppose a machine that costs $80,000 has a useful life of 10 years. Also suppose that depreciation on the machine is $8,000 for tax ...

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