Posted by **jim1** on Friday, March 11, 2011 at 11:42pm.

Information about a project Darcy Company is considering is as follows:

Investment $1,000,000

Revenues $700,000

Variable costs $140,000

Fixed out-of-pocket costs $80,000

Cost of capital 12%

Tax rate 40%

The property is considered 5-year property for tax purposes. The company plans to use MACRS and dispose of the property at the end of the sixth year. No salvage value is expected. Assume all cash flows occur at the end of the year. Round amounts to dollars.

The tax savings from depreciation in Year 2 would be

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