Solved:Question: A firm invests $10 million in a new stamping machine. It depreciates it straight line for tax pur…….

Question:

A firm invests $10 million in a new stamping machine. It
depreciates it straight line for tax purposes over 5 years. The tax
rate is 19%, inflation is 4% a year, and the discount rate is 8%.
What is the PV of the depreciation tax shield?

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