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You are considering investing in a process that is a cost cutting proposal

Accounting

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You are considering investing in a process that is a cost cutting proposal. Net income from the project is expected to equal $27.50 for each of the three years of the project's life. The process has an initial cost of $125 and will be depreciated straight line to zero. Assume a 34% tax bracket, a discount rate of 15%, and a salvage value of zero.

What is the value of the annual depreciation tax shield for the project?

A) $ 6.80

B) $ 8.50

C) $14.17

D) $27.50

E) $41.67