In: Finance
| 
 Year 0  | 
 Year 1  | 
 Year 2  | 
 Year 3  | 
 Year 4  | 
 Year 5  | 
 Year 6  | 
 Year 7  | 
|
| 
 MACRS Depreciation Rate  | 
 ?14.29%  | 
 ?24.49%  | 
 ?17.49%  | 
 ?12.49%  | 
 ?8.93%  | 
 ?8.92%  | 
 ?8.93%  | 
 ?4.46%  | 
Massive? Amusements, an owner of theme? parks, invests $ 60 million to build a roller coaster. This can be depreciated using the MACRS schedule shown above. How much less is the depreciation tax shield for year 4 under MACRS depreciation than under? 7-year, straight-line? depreciation, if the tax rate is 35?%?
Depreciation tax shield for year 4 under MACRS depreciation and straight line method for first four year is calculated in excel and screen shot provided below:

In year 4, Depreciation tax shield under Straight line method = $3,000,000
In year 4, Depreciation tax shield under MACRS Method = $2,622,900.
Less Depreciation tax shield = $3,000,000 - $2,622,900
= $377,100
$377,100 less is the depreciation tax shield for year 4 under MACRS depreciation than under? 7-year, straight-line? depreciation