Homework Answers
Value of roller coaster = $66 million
Tax Rate = 40%
Depreciation in year 4 under MACRS = 8.93% of 66 million = $5893800
=> Tax shield = 0.40*5893800 = $2357520
Depreciation in year 4 under straight line = 66000000/7 = $9428571
=> Tax shield = 0.40*9428571 = $3771428
Difference = 3771428 - 2357520 = $1,413,908
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MACRS class for tax purposes. The asset has an acquisition cost of
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project. If the tax rate is 21 percent, what is the aftertax
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