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Trenton Fabrication Company purchased industrial tools costing $160,000, which fall in the 3-year property class under...

Trenton Fabrication Company purchased industrial tools costing $160,000, which fall in the 3-year property class under MACRS.

Use Appendix A and Exhibit 16-9 for your reference. (Use appropriate factor(s) from the tables provided.). (Round your final answers to the nearest dollar amount.)

Required:
1. Prepare a schedule of depreciation deductions assuming:
a.

The firm uses the accelerated depreciation schedule specified by MACRS

b.

The firm uses the optional straight-line depreciation method and the half-year convention.

2.

Calculate the present value of the depreciation tax shield under each depreciation method listed in part (1). Trenton Fabrication Company’s after-tax hurdle rate is 16 percent, and the firm’s tax rate is 30 percent.

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ekkarill92 answered 11 months ago
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